WASHINGTON (Reuters) - A U.S. banking regulator said on Wednesday that bitcoin does not currently pose a threat to the country’s banking system and that there is “space” for innovative financial technology firms to operate in the traditional lending business.

FILE PHOTO: Broken representations of the Bitcoin virtual currency, placed on a monitor that displays binary digits, are seen in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic/Illustration/File Photo

The marketplace is watching closely to see how Joseph Otting, who was sworn in as Comptroller of the Currency last month, will address a slew of issues including virtual currencies, fintech, and President Trump’s pledge to roll back rules introduced following the 2008 financial crisis.

Speaking during his first formal press briefing, Otting played down concerns over risks posed by bitcoin, which raced to new highs of $19,666 on Sunday, saying a recent informal OCC poll of banks showed they had little exposure to the virtual currency.

“Mostly the banks have stayed away from the currency ... it doesn’t seem to have come into the banking system,” he said, adding that the OCC feels the currency does not currently pose a threat to the safety and soundness of the banking system.

“But everybody’s watching it very closely,” he told reporters.

Otting, the first former banker to lead the OCC in decades, said he also saw a future for a charter for fintech firms, first proposed by his predecessor Thomas Curry, but that he needed time to study the concept.

“I’m not sure what it looks like and how it’s funded, but I do think there’s a space there that a technology solution can solve. Then the question is what is the requirement on that fintech to get that charter.”

He said that fintech firms were pouring into the small-dollar lending business to fill a void after regulators had “forced banks out of that space” with burdensome regulations and that he hoped banks would re-enter the business with their own fintech solutions.

“But I also am open to other entities coming in and providing those services if they’re not being fulfilled by the banking industry,” he added.

Otting spent more than 30 years as a banker with stints at U.S. Bank and Union Bank, and was most recently chief executive officer of OneWest, the California lender started by Treasury secretary Steven Mnuchin after the 2008 housing crisis.

Echoing other bankers as well as many Republicans, Otting said he believed capital rules had become too complicated for smaller banks and that reviewing these requirements was one of his priorities.

He added that he would also like to see regulators and lawmakers review anti-money laundering rules that are making life tough for small banks.

“I think this area of small, consumer lending in the banking business probably needs to be thought through,” he said.