Digital assets belong in traditional banking, ex-U.S. regulator says

Quick Take

  • Former top U.S. banking regulator sees more room for digital currency projects in traditional banks.
  • Regulators might view increased exposure to digital assets warily, said an executive with Chain Bridge Partners, a regulatory advisory firm.
  • The executives spoke at the Bank Policy Institute annual conference in New York on Tuesday.

More crypto business and innovation should be moved into the traditional banking industry, at least according to some bankers and a former bank regulator.

“The federal government doesn’t want basically unregulated third parties basically creating their own currency,” Gene Ludwig, a former top U.S. banking regulator who now runs a regulatory consultancy firm, said at the Bank Policy Institute annual conference in New York on Tuesday.

Instead of experimenting with a central bank digital currency, regulators should “allow banks to play more aggressively in the crypto market,” Ludwig said. “If we’re going to allow crypto at all, the banking industry is the right place to do it, because it is regulated."

But regulators might view increased exposure to digital assets warily, cautioned Jeremiah Norton, managing member of Chain Bridge Partners, a regulatory advisory firm.

“I think the coin argument is the most tricky and fraught with peril,” said Norton, with U.S. regulators telling banks, "'If you’re thinking about thinking about crypto, come to us first.’”

“I don’t see a lot of running room for algorithmic players in the regulated space anytime soon," Norton said.


© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Colin oversees and contributes policy, regulatory, political, and legal coverage for The Block. Before joining The Block he covered congressional economic policy, including fintech legislation, for Bloomberg Industry Group and Politico, with additional stints at the Washington Examiner and American Banker. Colin is an alumnus of Columbia University's Graduate School of Journalism and Sewanee: The University of the South. 

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