Brian Brooks leaves OCC
Cryptocurrencies,  Regulation

Crypto-friendly Brian Brooks steps down as bank overseer

The former Coinbase executive’s rulings at the Office of the Comptroller of the Currency aided the cryptocurrency industry by allowing banks to custody and make payments with stablecoins

Brian Brooks will step down as Acting Comptroller of the Currency today, the agency announced.

During his eight months at the head of the Office of the Comptroller of the Currency, Brooks, a former general counsel at Coinbase, enacted a number of reforms that helped push the cryptocurrency industry farther into the banking industry’s mainstream.

Most recently the OCC granted crypto custodian Anchorage the industry’s first national bank charter.

Another huge move was authorizing banks to use stablecoins to make payments and for other transactions on behalf of customers.

Jeremy Allaire, CEO of USDCoin stablecoin-issuer Circle called the Jan. 6 announcement “a HUGE way to start 2021… [that] paves the way for the use of leading dollar digital currencies such as USDC as a mainstream payment medium for all forms of payments and settlement, and helps put the U.S. in a leadership position in embracing the power of public blockchains.”

He added, “The significance of this can’t be understated.”

American Banker described Brooks as “one of the most active and controversial interim regulatory chiefs in recent memory.”

His “fierce advocacy for letting fintech firms access the banking system, drew criticism from the financial services industry,” it said, adding that critics in the financial industry “have described him as the nation’s ‘first fintech comptroller’ for his push to give nonbanks federal chartering options.”

Big steps for crypto

Another major step was the OCC’s July 22 letter authorizing U.S. banks and federal savings associations to provide custody services for cryptocurrencies.

Robert Cooper, CEO of cryptocurrency custodian Digivault, called that a “seismic development for crypto holders in the U.S.,” adding that it “echoes a broader trend regarding the acceptance of digital assets amongst global regulators.”

On September 21, Brooks’ office issued a letter “clarifying that U.S. banks are allowed to hold fiat currency reserves that back dollar-denominated stablecoins. 

Brooks made a more aggressive ruling on Nov. 20, informing banks that they could not discriminate against customers because they were part of a certain industry—cryptocurrency being an unstated but obvious example, along with firearms. Instead, the OCC said, they had to accept or reject customers “based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.” 

His actions have had mixed reviews from members of congress. Three weeks before Brooks’ letter authorizing banks to make payments with stablescoins, Sen. Mike Crapo (R-ID), chair of the Senate Banking Committee, called upon the OCC to do just that.

Praising the OCC’s July letter clarifying that banks and federal savings associations were permitted to provide cryptocurrency custody services for customers, Crapo said, “[i]t would be prudent to provide similar clarity for payments. The U.S. should develop clear rules of the road that protect businesses and consumers without stifling future innovation.”

On the other hand, on Nov. 10, five Democratic House members led by Rep. Rashida Tlaib (D-MI) and Rep. Stephen Lynch (D-MA) blasted Brooks for the OCC’s “recent unilateral actions in the digital financial activities space, including interpretive letters on cryptocurrency custody, stablecoins, and its announced plans to start offering special purpose ‘payments’ charters.”

These actions, they argued, favored large financial institutions, fintechs, and technology firms like Amazon and Facebook at the expense of consumers.

Brooks will be succeeded as Acting Comptroller on a temporary basis by OCC Chief Operating Officer Blake Paulson.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.