Clinton Official: Crypto, FinTech Threaten Banks

FinTechs and cryptocurrency companies that compete with banks without having to follow as many regulations are “getting away with murder,” Eugene Ludwig, comptroller of the currency during the President Bill Clinton administration, said Tuesday (Sept. 6).

Ludwig made the comments during a panel at The Clearing House and Bank Policy Institute’s yearly conference in New York, arguing that the lack of oversight of these companies could lead to the next recession, Bloomberg reported.

Ludwig added that if the Federal Reserve endorses a central bank digital currency (CBDC), that will move the deposit experience away from banking and into the government, which will present “all kinds of problems,” according to the report.

Banks should “retake the turf rather than let the turf devolve away” and be permitted to “play more aggressively in the crypto markets,” he said in the report, noting the current tendency is to do the opposite. Ludwig served as comptroller of the currency from 1993 to 1998 and is now a managing partner at Canapi Ventures, which invests in FinTechs.

His comments came days after a major Congressional effort to create stablecoin regulations hit a snag. While negotiations are apparently ongoing, they are likely to stretch beyond what the calendar allows.

Read more: US Stablecoin Bill Hits a Snag as Negotiations Break Down

Legislators initially planned to unveil a draft of the bill this week, but there are still numerous issues to work out, including the role of state regulators, the possibility of an official digital dollar in the future, and the question of how money held by crypto platforms should be treated.

While the bill was supposed to have a draft released weeks ago, there was an eleventh-hour request from the Treasury Department to add a provision to keep crypto customers’ money legally separated from the assets of the companies they are dealing with, which reportedly slowed things down even more.

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