The acting chief of the United States Office of the Comptroller of the Currency OCC, Michael Hsu, has expressed his hopes of bridging the gaps that currently exist in the supervision of crypto firms.
Crypto Firms Escaping Regulation, Says OCC Acting Chief
In his commentaries before the Federal Reserve Bank of Philadelphia on Tuesday, Hsu urged that a more unified and strong supervision for crypto firms be carried out, where regulators and relevant authorities would be able to directly oversee the conducts of a company and its subsidiaries so that risks can be reduced to the barest minimum. Hsu shares the sentiments that in the current industry, companies that are dealing in crypto can potentially escape regulations through their subsidiaries.
Hsu insists that no crypto firm is subject to serious scrutiny and consolidated supervision. This means that regulating eyes can omit things and situations, where risks can then potentially arise from.
Hsu then laid forward his approach that would require that both the federal and state regulators work hand in hand, with “more interdependence” while competing less for whose regulation will hold. For starters, he suggested that the OCC could actually be in the driving seat, determining what should count as comprehensive and consolidated supervision. He also noted that while the OCC would also know how to implement the supervisions, the task was way too big for any single regulatory agency to handle alone.
Hsu went on about the ultimate goal not being about stopping business cycles but building trust. He mentions how the boom-bust-reform cycle might be reduced if a proper check is placed on categorising crypto activities, defining synthetic banking, and finally identifying the characteristics which makes crypto firms warrant consolidated supervision.
Recall that the OCC chief once called for the industry to remember the lessons that the 2008 crisis taught. This will help to avoid some of the risks that come with crypto even as the number of users continues to grow massively in the United States. He mentioned the insurance giant American International Group whose unregulated subsidiary took the center stage during the financial crisis. Hsu insists it was an issue that could have been avoided if there was anything like consolidated supervision.
Treasury Secretary Janet Yellen picked Hsu as the acting OCC chief back in May, but President Joe Biden has since nominated former policy advisor Saule Omarova to lead the affairs of the institution. As part of her nomination, Omarova is expected to speak before the Senate Banking Committee on November 18.