ICBA Urges Policymakers to Prioritize National Security in New Crypto Rules

Washington, D.C. (Aug. 9, 2022) — The Independent Community Bankers of America (ICBA) told the Treasury Department that policymakers developing new rules for cryptocurrency should prioritize protecting national security amid catastrophic developments in the crypto markets this year.

In a comment letter issued the same day that Treasury’s Office of Foreign Assets Control sanctioned virtual currency mixer Tornado Cash, ICBA said digital assets—including private stablecoins—pose risks of scams and misrepresentations as well as destabilizing the financial system. Federal agencies should collaborate to establish a clear regulatory framework for digital assets, and Congress should not authorize the creation of a U.S. central bank digital currency, ICBA said.

“As the sanctions against virtual currency mixer Tornado Cash indicate, ICBA and the nation’s community bankers are rightly concerned about the privacy, cybersecurity, and systemic risks posed by cryptocurrency,” ICBA President and CEO Rebeca Romero Rainey said today. “Policymakers should collaborate to develop a comprehensive regulatory framework for digital assets while utilizing more effective alternatives to a U.S. CBDC, including deposit accounts and faster payments.”

In its comment letter, ICBA said:

• Policymakers should limit stablecoin issuance to insured depository institutions to avoid disintermediating community banks, reducing deposits in the banking system, restricting access to credit in local communities, and destabilizing financial stability and national security.
• Banking regulators should continue the work they started with the Crypto-Asset Policy Sprint Initiative and communicate clear guidelines on how community banks can safely and permissibly offer crypto products and services.
• Policymakers should bar unregulated entities from issuing stablecoins and maintain the separation of banking and commerce to prevent Big Tech firms from monopolizing the marketplace.
• A U.S. CBDC would introduce costs and risks to consumers, small businesses, and the broader economy without yielding benefits more effectively than alternative methods, such as deposit accounts and faster payments.

Read ICBA’s complete comment letter.

About ICBA
The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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