Acting Comptroller of the Currency Michael J. Hsu highlighted the need for collaboration and coordination with large cryptocurrency brokers to better understand the risks within the growing $2 trillion cryptocurrency market.
Speaking at the Transatlantic Finance Forum on “The Future of Crypto Assets and Regulation,” Hsu pointed out the various places — cryptocurrency exchanges, non-fungible tokens (NFTs) and the metaverse — where anyone with an internet connection can invest, and I add:
“The integration of cryptocurrencies has occurred despite legal and regulatory uncertainty, and a series of scams, hacks, and other disturbing events. For financial regulators like myself, this presents a number of questions. Where should regulatory attention be focused? What should be done? For whom? And because?”
According to Hsu, the Office of the Comptroller of the Currency (OCC) reminded banks to prove their ability before obtaining federal permission to engage in crypto activities.
The Acting Comptroller also highlighted the growing risks in crypto, as USD-backed stablecoin holders are confident they can redeem their stablecoins for US dollars on demand, at par, no questions asked:
“What if, however, that trust faltered or was lost? Stablecoin holders, knowing that whoever redeems first would have the highest chance of getting their money back, would rationally redeem it immediately.”
Hsu asks for the collaboration of cryptocurrency intermediaries to minimize the consequences of the loss of confidence in cryptocurrencies. “While banks and trust companies have a long and successful history of safekeeping and protecting assets, the technology underlying cryptocurrencies and the governance associated with certain tokens present a number of novel issues that warrant careful analysis and consideration.” , he concluded.
Related: US Lawmaker Hints At Upcoming Crypto Legislation As Jerome Powell Says Fed Will Release Report On Digital Currency Soon
At his confirmation hearing last week, Federal Reserve Chairman Jerome Powell confirmed that the agency will release a new report on digital currencies despite not being “where we needed to get it.”
New legislation on digital currency coming soon
-Tom Emmer (@RepTomEmmer) January 11, 2022
As Cointelegraph reported, Powell highlighted ongoing changes in monetary policy, which are expected to address politics around the potential launch of a central bank digital currency in the United States:
“The report really is ready to go and I hope we drop it, I hate to say it again, in the next few weeks.”