United States Acting Comptroller of the Currency Michael Hsu urged his fellow regulators not to lower their standards when dealing with crypto under the pressure of “being perceived as anti-innovation Luddite.” According to the OCC, it’s necessary to “learn and smartly adapt” to ensure safety, soundness, and fairness regarding the industry.
Hsu made his remarks on crypto during his speech at the Harvard Law School on Oct. 11. The full text of the speech was published on the OCC’s official website.
Having started from his private experience example, Hsu criticized the rush and fear of missing out (FOMO) syndrome, which, in his opinion, heavily influenced the regulator community when it comes to crypto:
“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.”
Reflecting on two types of approach toward any new industry — taming and accommodation — Hsu revealed his fear that regulators in the U.S. have chosen the second one and “over-accommodated” the industry. What can correct this situation is deeper cooperation between the numerous regulatory bodies. Hsu pointed out his office’s experience of collaborating with the Federal Reserve System, the Federal Deposit Insurance Corporation and at least several state banking supervisors.
An official also mentioned three areas that need clarity about supervisory expectations in the near term: liquidity risk management of deposits from crypto-asset companies, including stablecoin issuers; finder activities, especially related to crypto trade facilitation and crypto custody. At this point, he believes, interagency efforts have fairly advanced only on the first two.
In conclusion, Hsu agreed with his reputation as crypto-skeptic, but made reservations about the promises of crypto he still considers important:
“Programmability, composability and tokenization hold promise. Blockchain development can be credited with bringing these ideas to the fore.”
Hsu is known for his extra-cautious approach to crypto and repetitive warnings to banks regarding their involvement with the digital assets market.