Stabilizing stablecoins and paving the way for a coordinated and collaborative regulatory approach to cryptocurrencies should become the key focus of US regulators, and banking regulation could provide stablecoin holders with more confidence and security, according to Michael. J. Hsu, Acting Chief of the USA Comptroller of the Currency (OCC).
The “integration” of cryptocurrencies occurred despite legal and regulatory uncertainty, as well as “a series of scams, hacks and other disruptive events,” Hsu told the British-American Business Transatlantic Finance Forum on January 13.
“For financial regulators like me, this raises a number of questions. Where should regulators focus their attention? What should be done? By whom? And why?” Hsu said.
The official argues that stablecoins play a critical role in facilitating the growth of decentralized finance (DeFi) and as such could be considered the “oxygen of the crypto ecosystem.”
However, they also present unique risks, and these risks are particularly relevant for stablecoins “with questionable or opaque reserve management practices,” according to Hsu.
However, he said,
“Fortunately, we have an effective tool to mitigate execution risk: banking regulation. Issuers of stablecoins subject to bank regulation would give holders of those stablecoins confidence that those coins were as reliable and ‘good at money’ as bank deposits. “
Hsu argues that banking regulation would give credibility to the ‘stable’ part of the ‘stablecoin’, while regulating its issuers like banks may allow for further innovation in crypto and “make those innovations more durable.”
The head of the OCC also said that cooperation and coordination between regulators were necessary to keep up with and respond effectively to the expansion of cryptocurrencies throughout the financial system.
He suggested that regulators should focus on major crypto companies, among which “none are subject to comprehensive consolidated supervision where a single authority has a line of sight of the entirety of an intermediary’s activities.”
According to the official,
“As large crypto intermediaries expand, engage in a broader range of activities and risks, and deepen their interconnection with the traditional financial system, the risks of this lack of comprehensive consolidated supervision will increase, as will the need for collaboration and inter-institutional coordination. . “
– Tether Freezes USD 160M-Heavy Addresses in Law Enforcement Request
– Banks Launch Stablecoin Consortium, Crypto Regulation Discussion in Hong Kong
– Top 3 Cryptocurrency-Related Comments from the Chairman of the US Federal Reserve to the Senate Banking Committee
– Coinbase to Launch Crypto Derivatives in the US, While Lawmakers Urge CFTC to Tighten Crypto Regulation
– Crypto Regulation Trends of 2022: Focus on DeFi, Stablecoins, NFT and More
– DeFi Trends in 2022: Growing Interest, Regulation, and New Roles for DAO, DEX, NFT, and Gaming