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Crypto, CRA, data sharing: Bank regulators’ ambitious priorities for 2022
T
his year we might see a big overhaul in the crypto world as the federal financial regulators are geared up towards reshaping several banking rules and create some others.
We all know that our congress is deeply divided on this issue, which means oversight of this new world of digital assets remains lacking. In absence of congressional actions, the federal financial regulators are moving quickly to provide the much needed oversight. First, we see the financial watchdogs provide guidance on the digital currencies. Furthermore, they’ve also seen these bodies strictly scrutinize bank mergers and finally modernizing the Community Reinvestment Act.
But what’s the agenda here? Well, despite the heavy backlash from the industry players, regulators are seeing this as a unique opportunity to fulfill the current administration’s liberal agenda. Before long, the regulators will begin planting new democratic appointees just to ensure that and perhaps leave their mark while at it. The current Federal deposit insurance Corp chairperson Jelena McWilliams who by the way was appointed by the Trump’s Administration stepped down last month leaving full control of the Agency to Democrats. Meanwhile, it is worthwhile noting that the Consumer Financial Protection Bureau and the Comptroller of the Currency are all headed by democrats. As if that’s not enough, President Biden recently released three nominations to fill out the gaps in the Federal Reserve Board. One of the issues the Fed has been trying to explore at deeper lengths is the possibility of a central bank digital currency and whether the idea is feasible (even remotely). On the issues to do with mergers and acquisitions, some of the regulators are looking for thorough consideration of the impact this would have on the community 80 | MARCH 2022
and also a systemic risk assessment when weighing applications for larger deals. And this is not as simple as it may sound, some of these dealings have chilling effects on combinations involving large regional banks which makes sense why the financial watchdogs are interested. In addition to that, the regulators are also interested in laying the groundwork to update CRA rules especially given the rise of digital banking, possibly to give consumers more control over their personal financial data. Some of the issues the regulators will be looking at include; There has been some push and pull relationship between the bank regulators and congress about this issue. Congress is looking for a way where bank regulators could impose more stringent rules to manage the financial risks of the emerging cryptocurrencies and stablecoins. In November last year, the regulators issued a report which highlights how helpful it would be if congress was to introduce a regulatory framework for the digital assets. To that effect, congress remains utterly uninterested in coming up with crypto legislation anytime in the near
