The Acting Comptroller of the Currency, Michael J. Hsu, has pointed to the need for collaborations in the cryptocurrency sector. Hsu noted that large players in the crypto sector needed to work together to support the growth of the booming crypto sector.
Hsu was speaking during the Transatlantic Finance Forum, where he talked in length about the different areas in the crypto industry.
OCC calls for regulation
One of the areas that Hsu focused on was the lack of legal certainty in the cryptocurrency sector. Hsu mentioned the rapid growth of this sector over the past five years, noting that its valuation had increased from around $100 billion to the current $2 trillion within a short period.
Hsu said that while crypto was going mainstream, there was still a gap in regulatory matters. “This 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?” he said.
He also addressed the matter of stablecoins. Over the past year, stablecoins have been a topic of discussion among US regulators, who have mentioned these coins present a risk to financial stability.
On the issue of stablecoins, Hsu noted that holders of the USD-backed coins have trust in them because they can be easily redeemed for fiat. However, he mentioned that if this trust was lost, “stablecoin holders, knowing that the first to redeem would have the highest chance of getting their money back, would rationally redeem immediately.”
Such a situation would create a crisis because there was no guarantee that the stablecoin issuer would have the ability to fulfil all the obligations.
Jerome Powell, the chair of the US Federal Reserve, had earlier addressed the issue of stablecoins during a congressional hearing, hinting that if a digital dollar was launched, it could work alongside privately issued stablecoins.
OCC calls for collaborations
Hsu noted that one of the things that would benefit the crypto industry is a collaboration between intermediaries in the industry. This would minimize the risk of losses in case trust is lost.
“While banks and trust companies have a long and successful history of custodying and safeguarding assets, the technology underlying crypto and the associated governance with certain tokens present a host of novel issues warranting careful analysis and consideration,” he added.
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