John Reed Stark, former head of the Internet Enforcement Office of the US Securities and Exchange Commission (SEC), stated on the social media platform X that the US cryptocurrency field is suffering unprecedented financial regulatory shocks.
Stark began by highlighting the Federal Reserve’s (Fed) new activity regulation program launched on Aug. 8. Part of the plan, Stark said, is to regulate U.S. banks’ participation in dollar-backed tokens, such as the recently launched PaypalUSD or other stablecoins.
This will be a challenging task for most traditional banks as the Fed judges their ability to manage the myriad of risks associated with these dollar-backed tokens. These risks include money laundering, customer churn and hacking.
Stark then pointed to another traditional regulator, the Federal Deposit Insurance Corporation (FDIC), for its aggressive cryptocurrency regulation policies.
Stark believes that U.S. cryptocurrency users should view the aforementioned FIL as a precursor to the FDIC’s increased regulation of all bank-related cryptocurrency transactions.
Stark drew attention to another similar order issued by the U.S. Office of the Comptroller of the Currency (OCC).