A new Notice of Proposed Rulemaking by the United States Office of the Comptroller of the Currency (OCC) on Friday could ensure fair access to banking services to ‘legal but disfavored’ companies that have previously struggled to build working relationships with banks.
According to Marco Santori, Chief Legal Officer at cryptocurrency exchange Kraken, these include “customers like the oil & gas biz, independent ATM operators and of course… crypto companies.”
“Crypto OGs know the single greatest impediment to widespread adoption has been and continues to be the lack of access to banking services,” Santori wrote. “In its early days, Bitcoin was caught up in Operation Chokepoint, and crypto more broadly is still caught up today.”
1/ 🚨 BREAKING: US Office of the Comptroller of the Currency proposes rule prohibiting large banks from discriminating against "legal but disfavored" customers like oil & gas biz, independent ATM operators and of course…
— Marco Santori (@msantoriESQ) November 20, 2020
‘Operation Chokepoint’ is reportedly an Obama-era program that placed strained on the relationships from these ‘legal but disfavored’ industries.
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The Association of Credit and Collection Professionals, which could also stand to benefit from the proposed rule, reported that during Operation Chokepoint, “the Federal Deposit Insurance Corporation and U.S. Department of Justice (DOJ) reportedly applied pressure to financial institutions to cut off financial services to certain licensed, legally operating industries.”
Marco Santori: “This Proposed Rule Reads like a Basic Bill of Rights for Bank Customers.”
However, it seems that the era of strained relationships between crypto and banks may soon be drawing to a close.
Santori said that “this proposed rule reads like a basic bill of rights for bank customers – one that you’d be shocked to hear didn’t already exist.”
The proposed rule says that in order “to provide fair access to financial services”, a bank will “make each financial service it offers available to all persons… served, on proportionally equal terms,” and “will not deny any person a financial service… except [as] justified by such person’s quantified and documented failure to meet quantitative, impartial risk-based standards established in advance.”
The new proposed rule will only apply to large banks, which Santori says “is quite sensible if you think about who the culprits are, and the relative costs of compliance.” He also pointed out that the proposed rule “doesn’t demand that banks enter lines of business for which they aren’t prepared.”
The OCC Seems to Be Taking a Favorable Stance on Crytpo
The new proposed rule is the latest in a series of moves that the OCC has made to directly or indirectly support the development of the cryptocurrency industry in recent months. The OCC is currently led by Brian Brooks, who joined the office earlier this year. Brooks previously served as the Chief Legal Officer at Coinbase.
In July, the OCC published an open letter that made it clear that banks can provide cryptocurrency custody services. CoinDesk reported that in the letter, Senior Deputy Comptroller and Senior Counsel, Jonathan Gould “wrote that any national bank can hold onto the unique cryptographic keys for a cryptocurrency wallet, clearing the way for national banks to hold digital assets for their clients.”