New Yorker columnist John Cassidy authored a piece called “Washington Needs a Crypto Rethink.” In it, he outlines issues related to Sam Bankman-Fried’s downfall and weighs regulatory and legislative options for oversight of the crypto market.

At a Senate Banking Committee nomination hearing on November 30, Sen. Elizabeth Warren (D-MA) praised the actions of FDIC acting chair Martin Gruenberg with respect to cryptocurrency. She said, “Our banks stayed safe even as crypto imploded because many of President Biden’s regulators, like acting chairman Gruenberg, fought to keep crypto from becoming dangerously intertwined with our banks. He did this despite the Trump administration's and crypto boosters’ aggressive efforts to bring crypto and all its risks into traditional banking.” She also referred to cryptocurrency as toxic and said it does not belong in the traditional banking system.

On November 21 Senate Banking Committee Chair Sherrod Brown (D-OH) and Sens. Jack Reed (D-RI), Chris Van Hollen (D-MD), and Tina Smith (D-MN) sent a letter to the FDIC, OCC, and FDIC urging them to scrutinize cryptocurrency investment products being offered by SoFi, a fintech lender, and determine whether the products comply with banking and consumer protection rules.

On November 21 Sens. Dick Durbin (D-IL), Elizabeth Warren (D-MA), and Tina Smith (D-MN) sent a letter to Fidelity Investments cautioning the company against allowing 401(k) investors to put their money into cryptocurrency. The letter says, “By many measures, we are already in a retirement security crisis, and it should not be made worse by exposing retirement savings to unnecessary risk” and cites the recent collapse of FTX has evidence that such investments are unwise.

Senate Finance Committee Chairman Ron Wyden (D-OR) sent letters to Binance, Coinbase, and other cryptocurrency exchanges calling for them to provide information about their organizational structures, balance sheets, and real estate acquisitions, among other things. He said that he is focused on consumer protections needed for customers of exchanges.

The Federal Reserve Bank of New York announced yesterday that it will join a variety of financial companies in a 12-week digital money pilot project advised by Sullivan & Cromwell LLP. The Fed aims to use this opportunity to explore the feasibility of “an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multientity distributed ledger.” The project is called the Regulated Liability Network U.S. Pilot.

The Consumer Financial Protection Bureau has released a bulletin “that highlights complaints the CFPB received related to crypto-assets. Consumers most commonly reported being victimized by frauds, theft, account hacks, and scams. Consumers also had issues with executing transactions and transferring assets between exchanges. Many consumers had issues with accessing funds in their account due to outright platform failures, identity verification issues, security holds, or because of technical issues with platforms. Poor customer service is a common theme across crypto-related complaints.” CFPB Chair Rohit Chopra said that complaints suggest that bad actors are using digital assets to harm consumers.

The Federal Reserve Bank of New York issued a report regarding the Phase I results of Project Cedar, the project that the New York Innovation Center is undertaking to develop a technical framework for a theoretical CBDC. The report’s key findings include that cross-border payments supported by blockchain can deliver faster and safer payments.

The Office of the Comptroller of the Currency announced that it will create a new agency, the Office of Financial Technology, early in 2023. This will incorporate the existing Office of Innovation and help to deepen the OCC’s understanding of fintech. Acting OCC head Michael Hsu said, “Financial technology is changing rapidly and bank-fintech partnerships are likely to continue growing in number and complexity. To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape. The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission.”