No Rush On Crypto Guidance Due To Crashes, Officials Say 

A rush to add new crypto regulatory guidance has slowed down as trouble in the crypto space has made it a less urgent task, The Wall Street Journal (WSJ) wrote.

Federal agencies have seen less of a need to publish interagency guidance on how banks should treat crypto as the value of the assets has fallen lately, according to Michael Hsu, acting comptroller of the currency.

Hsu, speaking at a banking industry conference in New York on Wednesday (Sept. 7), said there was “just a little bit more breathing space” now.

The overall crypto market capitalization was at $960 billion on Wednesday, down from around $3 trillion in November.

The Office of the Comptroller of the Currency joined the chorus with the Federal Reserve Board and Federal Deposit Insurance Corp. to announce a “policy sprint” for crypto assets, promising more clarity on the issue.

Hsu said there was a period of “intense curiosity and questions” from banks surrounding the digital assets – but this was before the turmoil that unfolded this year, with numerous bankruptcies and companies freezing withdrawals.

Hsu also cautioned that involvement in crypto could see risks for traditional financial institutions – internet forums have seen numerous stories of “devastated” investors. And banks that just want to be custodians of digital assets have to be aware that the difference from the usual assets they’d be safeguarding before digital assets got big.

Regulators and banking institutions have issued statements before about the safety of crypto and how to approach the issue.

Read more: OCC Head Reiterates Banking Regulators’ Cautious Approach to Crypto

PYMNTS wrote recently that, with recent events, the Office of the Comptroller of the Currency has seen its position that lenders should ask for permission before participating in crypto, to show it all would be perfectly safe.

Hsu, speaking at a Clearing House and Bank Policy Institute conference, said the collapse of Terra, along with subsequent failures and closures, made the distinction clear.

“The federally regulated banking system, by contrast, has been largely unaffected,” Hsu said in his remarks at the event. “I believe this is due, at least in part, to the careful and cautious approach that we adopted and intend to maintain for the foreseeable future.”