OCC chief compares crypto-asset intermediaries to bankrupt banks
The Financial Stability Board (FSB) Crypto Working Group met on February 22. The US Comptroller of the Currency, Michael Hsu, delivered the meeting's opening speech and shared thoughts on international regulatory cooperation and collaboration.
Hsu gave most of the briefings to the Bank for Credit and Commerce International (BCCI), which was shut down in 1991 in seven countries over money laundering and other financial crimes. Before its closure, BCCI had offices in more than 72 countries. He said:
“BCCI's history is similar to that of FTX and other failed crypto-asset intermediaries.”
Like BCCI, FTX had no regulator and was not subject to regulation in the jurisdiction where the parent holding company was chartered. BCCI's collapse has led to greater scrutiny of international banks, Hsu said. It is one of the reforms brought about by the United States Foreign Banking Supervision Amendment Act (FBSEA).
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FBSEA gave US banking regulators access to information about foreign banks and led to similar legislation around the world. The FSB has a comprehensive regulatory framework for crypto asset activities, but has had little success. “The crypto industry continues to challenge what it sees as inappropriate or overly burdensome regulation and oversight, as the courts continue to compete for crypto business,” Hsu said.
Hsu emphasized the FSB's principle of “same activity, same risk, same regulatory effect” and declared that the competition between jurisdictions will benefit crypto companies. He added:
Although the underlying blockchain technology is said to be trust-resistant, almost all crypto activities are done by intermediaries, which users must trust.
These are common themes for Hsu, who observed a year ago that “no crypto platform is currently heavily regulated.” Not one.
Acting Comptroller Michael J. Hsu has emphasized the importance of maintaining trust in banks since #1863. pic.twitter.com/y1uvKvDzWZ
— OCC (@USOCC) February 22, 2024
In closing, Hsu talked about tokenization. The Office of the Comptroller of the Currency hosted a symposium on simulating real-world assets and liabilities earlier this month. The keynote speaker, the representative of the bank's international settlement, emphasized the practicality of blockchain tokenization. Hsu urges a closer look at the “financial stability profiles of different scenarios” for real-world assets.
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