Clinton Official: Crypto, FinTech Threaten Banks

FinTechs and cryptocurrency companies that compete with banks without having to follow so many regulations “get away with murder.” Eugene LudwigComptroller of the Currency under the administration of President Bill Clinton, said Tuesday, September 6.

Ludwig made the comments during a panel at The clearing house and Banking Policy Instituteat the annual conference in New York, arguing that the lack of oversight of these companies could lead to the next recessionreported Bloomberg.

Ludwig added that if the Federal Reserve approves a central bank digital currency (CBDC), which will shift the deposit experience away from the bank and towards the government, presenting “all sorts of problems”, according to the report.

Banks should “take back territory rather than let it be delegated” and be allowed to “play more aggressively in crypto markets,” he said in the report, noting that the current trend is to do the opposite. Ludwig was comptroller of the currency from 1993 to 1998 and is now managing partner at Canapi Venturesthat invests in FinTechs.

His comments came days after a major congressional effort to create stablecoin regulations hit a snag. Although negotiations are apparently underway, they are likely to stretch beyond what the schedule allows.

Read more: US Stablecoin Bill Hits Trouble as Negotiations Fail

Lawmakers had originally planned to unveil a draft of the bill this week, but there are still many issues to be resolved, including the role of state regulators, the possibility of an official digital dollar in the future, and the question how money held by crypto platforms should be treated.

While the bill was supposed to have a draft released weeks ago, the Treasury Department asked the Eleventh Hour to add a provision to legally separate crypto customer money from corporate assets with which they deal with, which would have slowed things down even further.

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