The OCC’s chief economist wants stablecoin issuers to be regulated for their excellent.
Charles Calomiris, who has overseen the OCC’s Economics Department, made the remarks in a new paper, “Chartering the FinTech Future.” In the new paper, he argued that the “traditional chartered banking system wallows in a state of unprofitability and inefficiency” and that the new fintech institutions are coming into survival and proving useful on leading us “down a path of substantially increased efficiency and stability.”
Fintech banks and stablecoin issuers are encouraged by the OCC to reach their full potential by “coming out of the shadows and joining the chartered banking system.”
The OCC is the banking regulatory office in the US Treasury department. It is led by Brian Brooks, a former executive at Coinbase.
Although Brooks criticized by Congress members for being “overly focused” on crypto, the OCC chief earlier this month but guaranteed that the US would never ban Bitcoin and assured “a lot of good news for crypto” on its way.
However, regulating coins is not what crypto firms had in mind, although Calomiris argued that it would ultimately benefit the industry.
Calomiris stated in his paper that by essentially regulating new “fintech shadow banks,” customers can be spared of “unscrupulous, dishonest, or misleading practices.”
Calomiris noted that the challenger banks would profit from obtaining national bank charters as it would lower their costs, help them provide better service, and gain greater access to financial services, “especially for the un- and under-banked.”
“Fintech shadow banks” refer to new, small banks to take on big chartered banks.
They have been more popular in the UK and US in the past decade but yet to start issuing stablecoins by themselves.
Stablecoin issuers like Tether and Center are being urged to get banking licenses by some regulators and lawmakers in the US.
The STABLE Act, cosponsored by “the squad” member Congresswoman Rashida Tlaib, proposed that stablecoin issuers must be regulated like banks for they pose systemic risk.
Although this iteration of the bill is unlikely to get passed as law soon, the notion of treating stablecoin companies like banks is gaining traction among regulators.