(Bloomberg) -- H. Rodgin Cohen, the dean of Wall Street lawyers, says it’s just a matter of time until U.S. regulators launch a sweeping response to bitcoin.
As global banks increasingly help investors bet on virtual currencies, federal authorities will develop a joint strategy for policing the burgeoning market, Cohen predicted in an interview. It would make sense for the Financial Stability Oversight Council -- a group of regulators led by the Treasury Department -- to take the lead, he said.
“Cryptocurrencies create so many issues that no one agency can be legitimately expected to deal with them, and FSOC would be an ideal place to bring the agencies together,” said Cohen, 73. “The objective is to make sure there’s a focused regulatory approach and understanding of the positives and negatives of cryptocurrencies.”
Cohen, who’s played a key role in responding several major banking crises, advises many of the biggest firms in part because of his experience predicting Washington’s actions. So far, banks have been intrigued by the frenzy over cryptocurrencies but reluctant to jump into the largely unregulated and opaque market, in part because of concerns they could run afoul of rules, such as strict requirements for preventing money laundering.
Read more on FSOC’s response so far: Bitcoin barely ranks among to risks
The banks “have been appropriately cautious in the absence of regulatory guidance,” said Cohen, who’s senior chairman of New York-based law firm Sullivan & Cromwell LLP. Still, “I can’t imagine any major institution isn’t looking carefully at the issue. I don’t think anybody will just hang back and say, ‘We’ll think about it in a couple years.’”