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šŸ’„Acting Comptroller of the Currency Testimony Highlights Focus on Crypto Moving ForwardšŸ’„
November 17, 2022
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The relationship between banks and crypto products will be under tighter scrutiny as all major financial regulators are focusing on digital assets, especially following the collapse of FTX.

OCC to Monitor Closely How Banks Integrate Crypto Products

The US Office of the Comptroller of the Currency (OCC), an independent bureau of the US Department of Treasury, will pay close attention to the relationship between banks and crypto products, according to aĀ statementĀ by OCC head Michael J. Hsu, who spoke before the Senate Banking Committee on November 15. However, the OCC admitted that the main focus would be on financial technology (fintech) generally, and crypto matters would come only afterward.

As per the OCC, fintech deserves special attention as retail banking is being conducted online. Bank-fintech partnerships have increased exponentially and become more complex, given that digitalization has touched upon online and mobile engagement, customer acquisition, big data, fraud detection, artificial intelligence (AI), and cloud management.

Michael J. Hsu said that the bureau had adjusted its bank information technology (BIT) examinations in response to these technological innovations to include assessments of ransomware, AI, cloud computing, and blockchain. On top of that, the OCC will work to make sure banks implement an effective risk management framework for fintech partnerships generally and, more specifically, digitalization.

On October 2022, the Acting Comptroller of the OCCĀ announcedĀ the creation of a new division focused on fintech, which will be built on the agency’s Office of Innovation set in 2016. The new Office of Financial Technology, to be established early next year, will likely involve crypto matters as well. For Hsu, adapting to digitalization and crypto adoption is one of the main priorities. Previously, he released several statements discussingĀ crypto risks,Ā vulnerabilities and volatility of cryptocurrencies,Ā standards for stablecoins, and theĀ relationshipĀ between banks and crypto.

The OCC supervises and regulates over 1,000 banks in the US, whose sizes range from very small community banks to the largest. Together, OCC-supervised banks hold $15.2 trillion in assets, which accounts for 65% of all the assets held in commercial US banks.

The OCC permits banks to engage in cryptocurrency, blockchain, andĀ stablecoinĀ activities, but only after they demonstrate that they have adequate controls in place. In its ā€˜crypto risks’ statement released last month, the OCC said:

ā€œThe promises of programmability, composability, and tokenization are intriguing and could, in theory, help solve a range of problems in the financial system while unlocking significant efficiency and economic potential. But that promise cannot mask the lack of clarity on basic things like ownership, the ever-changing landscape of consensus mechanisms and technology, and the unabating volume of scams, hacks, and fraud.ā€

Interestingly, the arguments came in response to a presentation by FTX submitted in July to the Financial Stability Oversight Council (FSOC), which Hsu is also a member of, calling for the integration of crypto and traditional finance (TradeFi).

ā€œIntegrating an immature crypto industry with a mature TradFi system without guardrails and gates would be imprudentā€ the OCC head said.

Last week, FTX went bankrupt.

Major US Banks Gradually Join Crypto Trend

After the OCC green-lighted crypto activities last year, some US banks have already jumped on the crypto bandwagon.

Last month, Bank of New York Mellon, the oldest bank in the US,Ā announcedĀ that it would enable select clients to hold and transfer Bitcoin and Ether through its platform. The bank created an enterprise Digital Assets Unit last year to build blockchain-related solutions. BNY Mellon is preparing to launch the industry’s first multi-asset platform that connects digital and traditional asset custody.

BNY Mellon CEO Robin Vince said:

ā€œTouching more than 20% of the world’s investable assets, BNY Mellon has the scale to reimagine financial markets through blockchain technology and digital assets.ā€

This is an important milestone for TradeFi and its integration of crypto products.

Earlier this year, JPMorgan Chase & CoĀ reportedlyĀ started to let all of its wealth management clients access cryptocurrency funds. Ironically, back in 2017, JPMorgan CEO Jamie DimonĀ saidĀ that those who buy Bitcoin were ā€˜stupid.’

In March, banking giant Goldman Sachs became the first major US bank to trade cryptocurrency over the counter (OTC) when itĀ tradedĀ a Bitcoin-linked non-deliverable option with Galaxy Digital.

Despite these precedents, there is still much skepticism across traditional banks, especially after the collapse of FTX, Luna, and Celsius. Still, JPMorgan, Morgan Stanley, Goldman, and Citigroup haveĀ dedicated teamsĀ for crypto and blockchain.

Fed, SEC Impose Tight Crypto Custody Rules

The OCC enables US banks to engage in crypto activities after demonstrating adequate control, but the US Federal Reserve (Fed), and the Securities and Exchanges Commission (SEC) are also on track and may impose even tighter rules, especially related to crypto custody.

To begin with, the Fed requires all banks to notify it prior to engaging in crypto activities, according to aĀ letterĀ released in August. Even if cryptocurrencies are only 11thĀ on the Fed’sĀ list of potential risks, the central bank will likely become more concerned following the collapse of FTX.

Responding before the same Senate Banking Committee on November 15, Michael Barr, the Fed’s top financial regulatory official, expressed concerns about risks from the non-bank sector, including cryptocurrencies, for which the Fed and other regulators have poor visibility. He said:

ā€œWe’re concerned about the risks that we don’t know about in the non-bank sector. That includes obviously crypto activity, but more broadly risks in parts of the financial system where we don’t have good visibility, we don’t have good transparency, we don’t have good data. That can create risks that blow back to the financial system that we do regulate.ā€

Earlier this year, the SECĀ saidĀ that all public companies – including banks – that offer crypto custody treat crypto as liabilities instead of assets, considering the risk. Recently, people familiar with the matterĀ toldĀ Reuters that the SEC decision made it too capital-intensive for banks to hold crypto, causing disruption of crypto projects.

US Representative Trey Hollingsworth stated:

ā€œWe’ve heard from a wide variety of stakeholders, banks among them, about how challenging this new staff accounting bulletin would be for them to be able to enter in to the space of custodying crypto assets. This edict came down without guidance, without input, without feedback, without conversation being had with industry.ā€

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

Lutnick said, ā€œThe Department of Commerce is going to start issuing its statistics on the blockchain because you are the crypto President. And we are going to put out GDP on the blockchain, so people can use the blockchain for data distribution. And then we’re going to make that available to the entire government. So, all of you can do it. We’re just ironing out all the details.ā€

The data includes Real GDP and the PCE Price Index,Ā which reflects changes in the prices of domestic consumer goods and services. The statistics are released monthly and quarterly. The biggest initial use will likely be by on-chain prediction markets. But as more data comes online, such as broader inflation data or interest rates from the Federal Reserve, it could be used to automate various financial instruments. Apart from using the data in smart contracts, sources of tamperproof data šŸ‘‰will become increasingly important for generative AI.

While it would be possible to procure the data from third parties, it is always ideal to get it from the source to ensure its accuracy. Getting data directly from government sources makes it tamperproof, provided the original data feed has not been manipulated before it reaches the oracle.

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šŸ’³ PayPal:Ā 
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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain areĀ Eternl,Ā Typhon,Ā Vespr,Ā Yoroi,Ā Lace,Ā ADAlite,Ā NuFi,Ā Daedalus,Ā Gero,Ā LodeWallet,Ā Coin Wallet,Ā ADAWallet,Ā Atomic,Ā Gem Wallet,Ā TrustĀ andĀ Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention toĀ Non-CustodialĀ andĀ CompatibilityĀ fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

Source

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XLM: GDMJF2OCHN3NNNX4T4F6POPBTXK23GTNSNQWUMIVKESTHMQM7XDYAIZT
XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

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