The former head of the Office of the Comptroller of the Currency (OCC) during the Clinton administration reportedly says that crypto firms competing with banks currently have the advantage.
According to a new report by Bloomberg, former Deutsche Bank executive Eugene Ludwig says that crypto firms are barging into territories that are usually reserved for traditional financial institutions and are “getting away with murder” due to the lack of regulations.
Ludwig speculates that unregulated crypto firms that take investor deposits and provide lending services without the proper oversight will be the cause of the next economic recession.
He also says that if the Federal Reserve were to ever get into crypto assets via a central bank digital currency (CBDC), they could end up replacing banks as a means for people to deposit money, which would present “all kinds of problems,” according to the report.
Ludwig says the solution to the issue is letting banks “play more aggressively in the crypto markets” so they can “retake the turf rather than let the turn devolve away,” but notes that the tendency now is for banks to do the opposite.
In 2018, Ludwig backed a decision from the OCC to let fintech companies apply for a license to set up bank-like services. However, during the last year, the OCC has made it tougher for crypto firms to acquire this kind of license.
Last November, the OCC also added extra regulations for banks looking to incorporate crypto assets into their business models.
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