US Acting Comptroller Advises Against Hasty Cryptocurrency Legislation

Acting Comptroller of the Currency of the United States, Michael Hsu, advised his fellow regulators not to compromise their standards while dealing with cryptocurrencies under the threat of “being perceived as anti-innovation Luddite.” The OCC asserts that in order to guarantee industry safety, soundness, and fairness, it is vital to “learn and smartly adapt.”

On October 11, Hsu spoke at the Harvard Law School and discussed cryptocurrency. The speech’s whole text was made available on the official OCC website. Hsu began by criticizing the rush and fear of missing out (FOMO) syndrome, which he said had a significant impact on the regulatory community with regard to cryptocurrencies:

“Promises of innovation and inclusion often mask crypto’s promotion of a gold rush vibe that exploits people’s fear of missing out on the next Google or Amazon.”

Hsu expressed his concern that American authorities had “over-accommodated” the sector by taking the second of two possible approaches to any new industry: taming and accommodating it. The expanded collaboration between the many regulatory organizations is what will be able to remedy this problem. Hsu cited the Federal Reserve System, the Federal Deposit Insurance Corporation, and at least a few state banking supervisors as organizations with whom his agency has worked in the past.

The management of liquidity risk of deposits from crypto-asset companies, including stablecoin issuers, finder activities, particularly those related to crypto trade facilitation, and crypto custody, are three other areas that require clarification regarding supervisory expectations in the near future. He thinks that only the first two interagency efforts have made significant progress thus far. Hsu agreed with his reputation as a crypto-skeptic in conclusion but expressed skepticism about the benefits of cryptocurrency he still deemed necessary:

“Programmability, composability and tokenization hold promise. Blockchain development can be credited with bringing these ideas to the fore.”

Hsu is renowned for his extreme caution regarding cryptocurrencies and repeatedly advising banks against becoming involved in the market for digital assets.

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