- Michael Hsu, head of the Comptroller of the Currency, said a “home” supervisor is required to regulate crypto firms from all over the world
- He said that crypto companies that deal with businesses in lots of different countries need to be watched over by the same supervisor,
- If these businesses continue their operations unregulated, they could try to get around laws by playing tricks and hiding how risky their activities are
At a banking conference in Washington DC, Acting Comptroller Michael Hsu highlighted why a consolidated “home country” supervisor is necessary for cryptocurrency firms that operate across different countries and jurisdictions. He argued that without this kind of oversight, firms could easily avoid regulations by playing “shell games” and hiding their devious intentions, especially with customer funds.
Furthermore, Hsu cited the bankruptcy of crypto exchange FTX as an example – saying it was similar to the Bank of Credit and Commerce International (BCCI) scandal, where financial crimes happening due to a lack of unified regulation go unnoticed unpunished.
He discussed how Bitcoin’s propositions are “elegant,” yet crypto has so far mainly become speculative, with intermediates processing much of its trading activity.
The Financial Stability Board (FSB), Bank for International Settlements (BIS), International Organization of Securities Commissions (IOSCO), and International Monetary Fund (IMF) were all listed as being actively engaged in establishing global standards for a regulatory framework governing cryptos. The BCCI case illustrated why trust needs to be fostered via regulatory cooperation and supervisory collaboration, which has also been seen throughout traditional banking practices.
Hsu concluded his speech by remarking on this precarious state of affairs- saying trust is “hard to earn and easy to lose”- making it imperative for institutions such as those he mentioned earlier to create a workable solution that will both ensure people’s safety while allowing cryptocurrencies to reach their potential as valuable digital assets.
Transparency Needed in Crypto Firms
To further expand on his ideas, Hsu suggested that the global crypto regulatory framework should be able to hold intermediaries responsible for their actions and provide protections for users. He also argued that without accountability, fraudsters and other criminal actors would take advantage of vulnerable investors and drive away customers from trustworthy firms.
Hsu noted that traditional banking had come a long way in providing security and trust- something he wants to see replicated within cryptocurrency. To achieve this, he emphasized the importance of gathering insight into financial activities- whether through banks or entities operating in multiple countries.
These observations clarified why an international body such as the OCC has been so quick to identify regulatory problems- particularly when understanding accurate risk profiles.
Along with other organizations, they have advocated for better structure and transparency to protect users while allowing cryptocurrencies to realize their potential fully.
The aftermath of FTX left a toll on financial institutions and the overall trust of retail buyers and investors. Without better regulation, crypto companies are still far from achieving mainstream success through faith.