The Acting Comptroller of the Currency, Michael J. Hsu, highlighted the need for collaboration and coordination with large crypto intermediaries to better understand the risks within the growing $2 trillion cryptocurrency market.
Speaking at the Transatlantic Finance Forum on the topic of “The Future of Crypto-Assets and Regulation”, Hsu pointed out the various venues — crypto exchanges, nonfungible tokens (NFT) and metaverse — where anyone with an internet connection can invest, adding:
“The mainstreaming of crypto has occurred despite regulatory and legal uncertainty, and a series of scams, hacks, and other disruptive events. For financial regulators like me, this presents a host of questions. Where should regulatory attention be focused? What should be done? By whom? And why?”
According to Hsu, the Office of the Comptroller of the Currency (OCC) reminded banks to demonstrate capability before getting federal permission to engage in crypto activities.
The acting Comptroller also highlighted the rising risks in crypto as the holders of USD-backed stablecoins trust that they can redeem their stablecoins for US dollars on demand, at par, with no questions asked:
“What if, however, that trust were to waver or be lost? Stablecoin holders, knowing that the first to redeem would have the highest chance of getting their money back, would rationally redeem immediately.”
Hsu calls for collaboration with crypto intermediaries to minimize the consequences of a loss of trust in crypto. “While banks and trust companies have a long and successful history of…