The US regulatory boots are about to land, and the Federal Reserve and other three major regulatory agencies will establish a unified banking service framework for cryptocurrencies

Michael Hsu, acting comptroller of the U.S. Office of the Comptroller of the Currency (OCC), has expressed his desire to work with other regulators to establish a unified banking services framework for cryptocurrencies.

During a virtual currency hearing of the U.S. House Financial Services Committee on Wednesday, Hsu’s cryptocurrency comments focused on what he sees as a “fragmented” level of oversight of the asset class by federal regulators.

The hearing, which brought together the various independent regulators responsible for overseeing U.S. national banks, was titled "Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions."

U.S. Congressman Tom Emmer (R-MN) urged each attendee to present their agency’s work related to creating cryptocurrency rules today. Federal Reserve Board Vice Chairman Randal Quarles and Federal Deposit Insurance Commission (FDIC) Chair Jelena McWilliams focused on internal efforts, primarily asking industry insiders for comment and emerging technology research related to central bank digital currencies (CBDCs) and other innovations.

But Hsu’s answer was more collaborative in nature. According to Hsu, he, McWilliams, and Quarles have been discussing the possibility of creating a “cross-departmental sprint group” to regulate cryptocurrencies. Quarles then reiterated that the three are currently “working together” to come up with unified definitions related to cryptocurrencies.

Quarles said:

“We are very focused on these cryptocurrency issues with the goal of getting answers and a shared view very quickly. I think that can be achieved.”

According to Hsu, the lack of cooperation among federal regulators on crypto issues is a pain point.

He said:

“I’m concerned that regulators are taking a piecemeal, agency-by-agency approach to addressing the technology-driven changes happening today.”

Hsu’s testimony comes after he announced today a review of actions taken by his previous OCC office. This includes pending actions related to cryptocurrencies, including interpretive letters related to bank custody of stablecoins, stablecoin reserves, and banking services for crypto companies applying for federal bank charters. Hsu said the review is scheduled to be completed this summer.

Former OCC Comptroller Brian Brooks made strides on crypto, though some in Congress accused him of over-expanding the powers of the U.S. banking regulator. Hsu’s testimony indicated that he is interested in reviewing all actions to more fully hear from “all stakeholders.”

As Rep. Warren Davidson (R-OH) noted, now that some cryptocurrency companies have applied for federal charters for banking services, they may need guidance from the Federal Deposit Insurance Commission (FDIC). Currently, the FDIC does not insure cryptocurrency deposits. His questions to McWilliams were submitted for the record and may be answered in writing in the future.

Likewise, the Fed just released guidance on “new types of institutions,” which includes standards for some newly formed OCC-chartered firms to obtain Fed services. The regulator is currently seeking public comment on the guidance.

Hsu said that U.S. banking regulators need to provide some approval path for cryptocurrency and fintech companies and should not ignore the growing interest of these companies in bank charters as a path to compliance. Hsu said that the OCC is reviewing upcoming actions to re-examine the need for and impact of cryptocurrency bank charters in other areas.

“That’s why we’re reexamining [the OCC’s actions on crypto], to strike that balance in the right way,” Hsu said, adding:

“And we’re doing this together because it’s not just the OCC that’s doing this. It’s the other regulators as well.”