Brian Brooks says 'antiquated rules' need updates for a future of DeFi and software-based banks

Acting Comptroller of the Currency Brian Brooks believes regulators need to re-think banking regulations in light of the emergence of decentralized finance (DeFi) applications and use cases.

A time in which some banks are entirely composed of software is on the horizon, according to Brooks, and regulators will need to adjust to that reality.

Brooks penned an opinion piece for the Financial Times in which he argued regulators need to come up with rules that set restrictions for technology itself rather than the people who operate it. Currently, most regulations create oversight for people, according to Brooks.

"We call it bank regulation, but we're really regulating bankers," he wrote.


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The advent of DeFi means new opportunities and new risks, said Brooks. Without federal regulatory clarity, states could create a "patchwork of inconsistent rules that impede the orderly development of a national market."

The Office of the Comptroller of the Currency (OCC) can't yet issue a federal bank charter to open-source software, only people, but Brooks said those "antiquated rules" should be revisited. Federal regulators can investigate and regulate a bank that is software-only by training examiners to read and test algorithms for legal requirements, meaning software banks can be adequately regulated just as human-driven banks.

Brooks, the former chief legal officer for Coinbase, has pushed the boundaries for crypto regulation within the OCC during his tenure. He recently issued a letter clarifying that banks can hold and transact in stablecoins from public blockchains.

However, his tenure may be coming to a close as the Biden administration takes office. Politico Pro reported Tuesday that Brooks is slated to depart at the close of this week, although an OCC spokesperson declined to confirm.


About Author

Aislinn Keely is a reporter on The Block's policy team holding down the legal beat. She covers court decisions, bankruptcies, regulatory actions and other key moments in the legal sphere, putting them in context for the wider crypto industry. Before The Block, she lent her voice to the NPR affiliate WFUV and helmed Fordham University's student newspaper. Send tips or thoughts on all things policy and legal to or follow her on Twitter for updates @AislinnKeely.