Michael Hsu Urges Stronger Oversight for Crypto Firms, Emphasizes on Tokenization
Summary:
Interim U.S. Comptroller of the Currency, Michael Hsu, addressed the Financial Stability Board's Crypto Working Group, emphasizing the importance of international collaboration in supervising financial activities. He highlighted the need for stronger regulations for international banks, compared crypto firms FTX and BCCI, and addressed the crypto industry's resistance to regulation. He also touched upon tokenization and the necessity for further scrutiny of its financial stability profiles.
On February 22, Michael Hsu, the interim U.S. Comptroller of the Currency, addressed the Financial Stability Board's (FSB) Crypto Working Group. He underscored the importance of international collaboration in overseeing financial activities. He initiated his speech by focusing on the Bank of Credit and Commerce International (BCCI), which was shut down in 1991 following charges of financial misconduct. This multinational bank, prior to its shutdown, had branches in 72 nations around the world. Drawing comparisons, Hsu stated, “FTX, like BCCI before it, lacked a single regulatory oversight, and its parent company wasn't subjected to regulations in its registered country.”
He stressed that the fall of BCCI led to stricter regulation of global banks. One such enhancement came in the form of the Foreign Bank Supervision Enhancement Act (FBSEA) in the United States. The FBSEA enabled U.S. banking regulators to gather information on foreign banks, prompting the rest of the world to adopt similar measures.
However, he remarked that the existing regulatory framework of FSB for crypto-related activities has failed to achieve the desired results. The crypto-industry continues to oppose what it views as intrusive or excessive regulation, while nations compete for their piece of the crypto business, Hsu noted.
He further stressed on the FSB guideline "same activity, same risk, same regulatory outcome", highlighting that this competition across jurisdictions serves as a leverage for these crypto establishments. “Despite the inherent traits of the underlying blockchain technology, almost all crypto transactions require intermediaries, and users must rely on them," Hsu said, reiterating that intense supervision of the crypto platforms is an area that's lacking.
Finally, Hsu touched upon tokenization, a subject that was discussed in detail at a symposium hosted by the Office of the Comptroller of the Currency earlier this month. A speaker from the Bank for International Settlements emphasized tokenization's practicality, even without blockchain. Hsu suggested an in-depth study of “financial stability profiles of different scenarios” for tokenizing real-world assets.
Published At
2/23/2024 12:26:24 AM
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