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The Biden administration is closing in on its nomination for chair of the Office of the Comptroller of the Currency, a job with a dramatically higher profile given the maturation of challenger banks, cryptocurrency and security risks.
The short list includes Michael Barr and Mehrsa Baradaran, with Barr considered the favorite while Baradaran is preferred by the Democratic Party's liberal wing. Barr is dean of the University of Michigan's public policy school, and served in the Treasury Department under Presidents Bill Clinton and Barack Obama. Baradaran teaches at the University of California, Irvine Law School and is an expert on the
Biden's earlier
The OCC nomination will come as companies active in the payments industry, such as Square, Stripe and Walmart, nudge closer to traditional banking. At the same time, cryptocurrency and blockchain projects abound, necessitating a new slate of regulations and protections against money laundering. And the ability of the OCC to implement policy itself is also in flux, as it considers licenses for fintechs and payment companies.
"The coming years will be more interesting for the OCC," said Robert Hockett, a law professor at Cornell University. "New banking platforms and associated forms of fintech are forcing new regulatory decisions, and the OCC will be taking the lead role in all of that deciding."
The OCC recently allowed banks to
The crypto-friendly stance was tied to Brian Brooks, the former acting head of the OCC in the Trump administration. Brooks
Brooks, the former chief legal officer at Coinbase, promoted cryptocurrency during his term. In July 2020 the OCC permitted
Like Brooks, Barr has experience in the world of cryptocurrency, having served as an
Baradaran, who is more closely aligned with the Elizabeth Warren/Sherrod Brown wing of the Democratic Party, would be more apt to take a harder stance against cryptocurrency and projects like Facebook's Diem.
"Barr is predisposed to emerging digital currencies, crypto exchanges, fintechs and more," said Charles Delingpole, CEO of ComplyAdvantage, and Barr, he added, will likely support policies that will facilitate the use and growth of crypto and related financial services. "That reinforces the importance of having robust 'know your bank' and 'know your customer' anti-money- laundering processes and frameworks in place by crypto exchanges and wallets. To mitigate potential compliance infraction."
Regardless of the chair appointment, the function and authority of the OCC could expand or be reined in. The 6-3 conservative Supreme Court majority could curtail the OCC's ability to offer an easier path to
The expansion of crypto and fintech are migrating money laundering and other financial crime away from cash, Delingpole said, which portends more challenging AML compliance.
"While cash is actually king for laundering, criminals will try and use these new financial services to conduct illegal activities, which is why crypto companies have to prepare and look ahead and understand that governments will evolve their regulatory policies as more adoption of these services and currencies take place," Delingpole said.