Karen Solomon's commentary was included by DL News in a piece on the SEC's regulatory crackdowns on crypto and how U.S. banking regulators will determine the sector’s future.
The Federal Reserve, Federal Deposit Insurance Corporate, and the Office of the Comptroller of the Currency’s recent string of cautions and law enforcement actions suggest that they are slowly bringing crypto under their thumb. Karen told DL News that the three agencies see it as irresponsible to leave assets that are not well understood outside of their grasp.
“Deciding whether to allow a brand new asset class – cryptocurrency and related activity – into the regulated space is an enormous challenge for regulators because the relative novelty of cryptocurrency means that regulators can’t predict how it will behave in crisis situations,” she said.
She continued, explaining that crypto being brought into the fold of big banks will be key to its survival in the US. One way to deal with uncertainty around crypto is to allow its careful, controlled entry into the realm of firms that are already regulated, and then to carefully calibrate supervision to the characteristics of the asset. “Regulators have tools to tailor their supervision to the activity, and the experience they gain in supervising cryptocurrency activities would enable them to develop more generally applicable standards and policies over time,” Karen said.
“It may actually be preferable for regulators to take on that challenge, rather than to allow crypto currency to evolve unsupervised beyond regulators’ direct influence,” she concluded.
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