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Crypto is Scary, But is it Essential?

Even if it’s his last day in office last week, Brooks is still talking about the positive role crypto, and blockchains can play in US banking.

Brian Brooks, who recently resigned as Acting Comptroller of the Currency last week, has called cryptocurrency, together with decentralized finance (DeFi) and stablecoins, “necessary” for the US to “continue to lead and succeed” in the world.

Brooks, a former Chief Legal Officer at prominent US cryptocurrency exchange Coinbase, helmed the Office of the Comptroller of the Currency (OCC) from May 2020. During his time, he gained a reputation for embracing financial innovation and opening doors for the crypto industry.

The OCC is an office of the US Treasury that regulates national banks and credit unions.

Brooks tweeted last Tuesday, “I’m incredibly optimistic that our big, brawling, risk-taking, the dynamic country will continue to lead and succeed—but not by protecting powerful incumbents. Success will come from disruptive ideas that are scary today but expected and even necessary tomorrow.”

Then he listed cryptocurrency, stablecoins, and decentralized finance – the blockchain-based protocols that replace the functions of traditional banks, along with lending and interest – as examples of innovations that are “scary to some today but necessary tomorrow.”

Crypto seems to fit the bill in his eyes, for it theoretically protects against an expansionist monetary policy where the Federal Reserve pumps more money into the economy. Some are worrying that such a policy will debase the currency. By having a hard cap of 21M BTC, Bitcoin is designed to be non-inflationary – although not all cryptocurrencies have a supply cap.

DeFi is essential so that people aren’t obligated to banks that may impose spending limits or void purchases at objectionable-but-legal businesses. And stablecoins, he added, can help the US dollar maintain its role as a medium of exchange worldwide.

Brooks didn’t just talk about crypto. By the end of his tenure, the Treasury office has issued guidance that OCC-regulated banks can utilize blockchains and stablecoins for payment activities and even issue stablecoins by themselves.

But the former Coinbase executive was similarly praised and panned for his work, all of which have taken place during the COVID-19 pandemic. In the previous year, many Democratic lawmakers objected to his attention on cryptocurrency when Americans were struggling to access stimulus payments and government loans.

Although outgoing President Trump nominated Brooks for a five-year term as OCC Chief in November, the chances for his nomination to go through have taken a hit after Democrats won both Senate runoffs in Georgia, therefore shifting control of the upper house. The current Senate Banking Committee Chairman Mike Crapo has previously indicated that it will take up his nomination.

Blake Paulson is now serving as the Acting Comptroller of the Currency until President-elect Joe Biden nominates a replacement.

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