The OCC Comptroller is calling for more federal coordination with cryptocurrency intermediaries

The Acting Comptroller of the Currency, Michael J. Hsu, emphasized the importance of collaboration and coordination with key cryptocurrency intermediaries to better understand the risks in the $2 trillion cryptocurrency market.

According to Hsu, there are a plethora of locations where anybody with an internet connection may invest — cryptocurrency exchanges, nonfungible tokens (NFT) and metaverse — all of which may be found on the range of public blockchains.

“The mainstreaming of crypto has occurred despite regulatory and legal uncertainty, and a series of scams, hacks, and other disruptive events. For financial regulators like me, this presents a host of questions. Where should regulatory attention be focused? What should be done? By whom? And why?”

According to the OCC, which is in charge of national bank regulation, lenders were reminded to demonstrate competence before obtaining federal authorization to trade cryptocurrency markets.

The Acting Comptroller also addressed the growing dangers in crypto, noting that investors using USD-backed stablecoins trust that they can exchange their stablecoins for dollars on demand, at par, with no questions asked:

“What if, however, that trust were to waver or be lost? Stablecoin holders, knowing that the first to redeem would have the highest chance of getting their money back, would rationally redeem immediately.”

To minimize the consequences of a loss of confidence in cryptocurrency, Hsu stresses the need for collaboration with crypto intermediaries. “While banks and trust companies have a long and successful history of custodying and protecting assets, bitcoin and its associated governance with particular tokens create a number of new issues that demand careful study and consideration,” he continued.

The Federal Reserve will publish a new study on digital currencies, according to Chairman Jerome Powell, who noted that the Fed did not “quite achieve where we needed to get it.”

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