U.S. Banking Watchdog Hsu Says Tokenization Promising, But Crypto Full of Fraud

Michael Hsu, the acting chief of the U.S Office of the Comptroller of the Currency that oversees banks, is excited about the possibilities of tokenization to solve settlement problems.

AccessTimeIconNov 7, 2023 at 4:53 p.m. UTC

Tokenization of assets could be the answer to the risky complexities of settling the movement of funds and securities, said Michael Hsu, the acting head of the U.S. Office of the Comptroller of the Currency.

"Tokenization is focused on solving an actual problem, and that problem is settlement." Hsu said at the DC Fintech Week event in Washington. "This is boring back-office stuff, but it's super, super important."

Any time an asset changes hands in the financial world, the transaction typically passes through multiple entities and checks of its validity before it's cleared and settled to officially land in the hands of the recipient. At any of those layers – most of which carry their own expenses that may be added to what the customer pays – the transaction has some risk of failure.

"Tokenization holds the promise to collapse that and to simplify it, if it's done right," he said.

His OCC is so engaged on the idea of the tokenization of real-world financial assets and liabilities that it's hosting a Feb. 8, 2024, all-day discussion on the topic at its Washington headquarters. But when it comes to the rest of the crypto space, Hsu remains suspicious.

"There seems to be more and more of a divide between crypto on one hand and tokenization," he said. Crypto, he said, "tends to be driven by the hope for speculative gain.""It still remains replete with frauds, scams and hacks," Hsu said.

Edited by Nikhilesh De.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.