Acting Comptroller of the Currency Michael J. Hsu emphasized the need for cooperation and coordination with large cryptocurrency intermediaries to better understand risks in the growing $2 trillion cryptocurrency market.
Speaking At the Transatlantic Finance Forum, titled “The Future of Crypto Assets and Regulation,” Hsu pointed to various venues — crypto exchanges, non-fungible tokens (NFTs) and Metaverse — where anyone with an internet connection can investment, adding:
“Despite regulatory and legal uncertainty, as well as a series of scams, hacks and other disruptive events, the mainstreaming of cryptocurrencies has occurred. For financial regulators like me, this raises many questions. Regulation Where should the focus be? What should be done? By whom? Why?”
According to Hsu, the Office of the Comptroller of the Currency (OCC) reminded banks to demonstrate their capabilities before obtaining a federal license to engage in crypto activities.
The Acting Comptroller also highlighted rising risks for cryptocurrencies, as holders of dollar-backed stablecoins believe they can exchange their stablecoins for dollars on demand without asking any questions:
“But what if that trust is shaken or lost? Stablecoin holders know that the first person to redeem is most likely to get their money back, and they will rationally redeem immediately.”
Hsu called for cooperation with crypto intermediaries to minimize the consequences of losing trust in crypto. “While banks and trust companies have a long and successful history of custody and protection of assets, cryptography and the governance associated with certain tokens raise many new issues that require careful analysis and consideration,” he concluded.
During last week’s confirmation hearing, Federal Reserve Chairman Jerome Powell confirmed that the agency will release a new report on digital currencies, although “there’s not enough where we need to get it.”
New digital currency legislation coming soon
– Tom Emmer (@RepTomEmmer) January 11, 2022
As Cointelegraph reported, Powell highlighted ongoing changes in monetary policy that are expected to address concerns surrounding a possible rollout. US central bank digital currency:
“This report is really ready and I hope we’ll drop it in the next few weeks – I don’t want to say it again.”