News  •  Regulation

US Bank Regulator: Virtual Currencies Could Be 'Revolutionary'

(@pete_rizzo_) | Published on March 4, 2015 at 18:41 BST

Office of Comptroller of the CurrencyThe head of an independent US agency within the US Treasury that supervises national banks has issued new statements on virtual currencies and their "potentially revolutionary" impact on banking.

Speaking before the Institute of International Bankers this week, the head of the Office of the Comptroller of the Currency (OCC) Thomas J Curry discussed virtual currency as part of a speech aimed at addressing the Bank Secrecy Act (BSA) and its ability to adapt to new innovations.

In his remarks, Curry referenced the "serious challenges" the banking industry faces from terrorist and criminal organisations, and how he believes they can be combated with strong risk management and anti-money laundering (AML) and BSA compliance.

Still, he suggested that the regulation has struggled to adapt to terrorists who now have access to advanced payments innovations.

Curry said:

"New payment systems are creating greater efficiencies and convenience, and virtual currencies offer the prospect of instantaneous transactions directly between individuals and entities on a global basis. These innovations are potentially revolutionary in their impact, and are advancing at a breakneck pace."

The OCC chief went on to characterize the BSA as "rooted in 20th century concepts", but framed virtual currencies as a potential ally to law enforcement in the fight against terror and criminal activity.

"It is also foreseeable that, if properly employed, technology can be used by banks and the government to better meet the goals of the BSA, by providing more accurate and timely information to law enforcement and regulators, while simultaneously reducing cost and burden," Curry added.

A former director of the Federal Deposit Insurance Corporation (FDIC), Curry has served as the head of the organisation since 2012.

Plea to banks

Though not addressing virtual currency directly, Curry went on to hint at some of the operational issues the industry and others have faced when trying to forge partnerships with the traditional financial system.

For example, he noted that US banks have closed the accounts of "entire categories of consumers" based on concerns about BSA and AML compliance.

Curry went on to encourage banks to refrain from terminating customer accounts provided they can "manage their risk appropriately", asking them to instead think about how they could help lower the risk of certain consumers and companies.

Curry ended his speech by addressing the scope of the challenge and the need for broad cooperation to achieve its goals, stating:

"To the extent that it can, the OCC is committed to playing a constructive role in the dialogue and working with other parts of the US government to address this important issue."

Washington, DC image via Shutterstock

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