Michelle Bowman’s Criticism of the US Regulatory System
At the Salzburg Global Seminar on bank regulation and supervision, Bowman emphasized the need for global regulators to focus on the oversight of new banking activities, especially banking as a service and digital assets. He declared that financial institutions have been left in a “supervisory gap” with respect to emerging technologies.
Despite some attempts to provide direction, there is still considerable doubt about the acceptability of and supervisory objectives for these activities […]. This puts banks in a precarious situation of relying on general yet non-binding declarations by policymakers, only to be reprimanded at a later date,” said Bowman, whose term at the Federal Reserve will conclude in 2034.
The governor further highlighted the dangers of the existing regulatory system, remarking that without an unambiguous regulatory system, regulators could demand new requirements from companies after they have already put in substantial investments. “If we are to be successful in our role of supervision and regulation,” she continued, “we must be prepared to engage in both novel and traditional activities.”
Bowman is among many other voices advocating for a well-defined regulatory system for digital assets. On June 20, Moody’s Ratings Agency cautioned that investors and companies may look for other crypto-tolerant countries if the United States does not offer legislation related to digital assets.
Proposed Legislation for Digital Commodities and Payment Stablecoins
Members of the House Financial Services Committee and House Agriculture Committee have recently presented a draft discussion that could provide a way for certain crypto assets to be classified as digital commodities. The proposed legislation would stop the US Securities and Exchange Commission (SEC) from refusing registration to digital asset trading platforms as a regulated alternative trading system and would permit these firms to provide “digital commodities and payment stablecoins.”
Bowman cautioned that a lack of a definite plan for banks concerning new technologies “could have serious repercussions for banks dealing with higher interest rates.”
Michelle Bowman, a member of the Board of Governors of the U.S. Federal Reserve System, has expressed her disapproval of the lack of a distinct regulatory structure for new technologies in the United States.
Does SEC Chair Gary Gensler have the ultimate authority regarding crypto regulation?
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