Fintech And Cryptocurrency Sector Threaten The Banks, According To Former OCC Head

Eugene Ludwig, former United States Comptroller under President Bill Clinton and managing partner at Canapi Ventures, has indicated that the fintech and cryptocurrency sectors pose a threat to banks, citing a lack of regulatory control.

Ludwig stated that rival banks and crypto sector enterprises face an unequal regulatory playing field, claiming that the latter is “getting away with murder,” according to Bloomberg on September 6.

Speaking at the annual Clearing House and Bank Policy Institute conference, the former official urged banks to “retake the turf rather than let the turf devolve away.”

According to Ludwig, crypto-related enterprises that accept deposits and provide lending services without established regulation could be the trigger for the next recession. His remarks follow the bankruptcy of the crypto lending site Celsius, which blamed liquidity concerns stemming from the ongoing digital asset market catastrophe.

Ludwig also discussed the idea of releasing a digital dollar, stating that such a move by the Federal Reserve would shift the deposit experience away from banks and toward the government. Ludwig argues that such an event will cause problems.

Ludwig, whose firm invests in fintech, has advocated for such firms to apply for bank-like charters. However, US regulators have tightened the standards for issuing such permits to crypto-related businesses and increased supervisory requirements for banks planning to offer digital asset services.

Predictably, the regulatory environment would shift dramatically due to the crypto winter, resulting in severe losses.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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