U.S. Banking Watchdog: You Can’t Trust Crypto Firms Until They Get Federal Oversight
The chief of the Office of the Comptroller of the Currency equated the FTX collapse with a well-known 1990s bank failure in arguing for consolidated industry regulators.
It may be difficult to trust a crypto company that isn't federally supervised, a key bank regulator said Monday.
As it stands, there’s no way for people to know which crypto firms they can rely on, said Michael Hsu, the acting head of the U.S. Office of the Comptroller of the Currency (OCC).
“We won't be able to know which players are trustworthy and which aren't until a credible third party, like a consolidated home country supervisor, can meaningfully oversee them,” Hsu said in remarks prepared for delivery at an Institute of International Bankers event in Washington, D.C. “Currently, no crypto platforms are subject to consolidated supervision. Not one.”
Hsu said the FTX mayhem last year reminded him of former international bank, Bank of Credit and Commerce International (BCCI) – a cautionary tale in supervision of a “complex web” of cross-border activity with no single regulator in charge of the big picture. The bank's 1991 implosion offers “striking similarities” to FTX, Hsu said, and a lesson for governments to insist that a single regulatory entity can see a whole institution.
He noted that international standard-setting organizations, such as the Financial Stability Board, are working on comprehensive global frameworks for supervising the sector.
“Trust is a fragile thing,” Hsu said. “We have learned this the hard way in banking. I believe it contains useful lessons for crypto.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.