Acting US Controller Says OCC Crypto Review and Interagency Crypto Sprint Complete

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Early in his tenure, Acting Currency Controller Michael Hsu initiated a review of crypto-specific actions taken prior to his installation. Hsu said on Wednesday that the review was complete and that the federal banking regulator would communicate its decisions and comments to bank charter applicants.

Hsu’s remarks came at the American Fintech Council’s Fintech Policy Summit, where he focused heavily on the lack of consolidated regulatory oversight for crypto firms.

In the past, Hsu has also insisted on the problem of the lack of coordinated efforts between agencies to clarify the rules of the road and regulate crypto firms. To that end, he set up a “crypto sprint” between the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation.

This joint effort has also ended, Hsu said on Wednesday, and added that the results will be released “shortly” in various forms.

“The content of these communications – on charter decisions, interpretive letters and the crypto sprint – will be largely aligned with the vision for the banking regulatory perimeter laid out here today,” he said.

These will clarify what Hsu calls the “regulatory perimeter” by focusing on what regulators see as the most important issues. Hsu included some of these questions in his remarks:

“How to define the” synthesis bank “? What constitutes a “one-size-fits-all” business for a crypto business? (Should some crypto activities even be allowed to mix?) What adjustments to banking prudential standards and supervisory approaches are needed to ensure that these businesses operate safely, steadily, and fairly? To meaningfully answer these and other critical questions, federal and state regulators will need to involve technology and crypto companies, academics, community groups, banks, trade associations, and other stakeholders. . “

Hsu argued that “fragmented supervision” obscures the sometimes “excessive” risks companies might take. He pointed to the patchwork of surveillance in 2008 that allowed AIG to take on large swathes of risk through a subsidiary, which ultimately led to the full-scale collapse of the company and a highly controversial bailout. Hsu called the event a lesson for crypto regulation, saying that in order to avert a similar catastrophe and establish “long-term trust” with the public, crypto firms and in particular stablecoin issuers should adopt a ” global and consolidated supervision “.

Hsu called on federal and state bank regulators to prioritize this development as well. He then named two companies – the crypto exchange Binance and the stablecoin operator Tether – as examples with unfavorable track records.

“This would clearly differentiate safe and healthy crypto firms from those that are only partially regulated and have a history of oversight failures, such as Binance and Tether,” he said.

The conclusions of the process come as the OCC draws closer to a change of direction. The Biden administration announced his appointment as head of the OCC, formally appealing to Cornell’s Law School professor Saule Omarova. Omarova faces resistance from Republicans, who accused her of being staunchly “anti-bank”.

© 2021 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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