Michael J. Hsu, Acting Currency Comptroller, stressed the importance of coordination and collaboration with large crypto intermediaries in order to better understand the risks associated with the $2 trillion growing cryptocurrency market.
Hsu spoke at the Transatlantic Finance Forum about the topic of “The Future of Crypto-Assets and Regulation”. He pointed out the many venues — crypto-exchanges, nonfungible tokens(NFT), and metaverse — that anyone can invest with an internet connection.
“Despite legal and regulatory uncertainty and a number of scams and hacks and other disruptive events, crypto mainstreaming has taken place. This raises many questions for financial regulators such as me. What should regulators be paying attention to? What should be done? Who should do it? Whom? And Why?”
Hsu reported that the Office of the Comptroller of the Currency reminded banks to show capability before they were granted federal permission to engage with crypto activities.
The Acting Comptroller highlighted the increasing risks of crypto, as holders of USD-backed stablecoins believe they can exchange their stablecoins for US Dollars on demand at par.
“What if that trust were to fail or be lost?” Because stablecoin holders know that the first person to redeem will have the best chance of getting their money back they would rationally decide to redeem immediately.
Hsu urges collaboration with crypto intermediaries in order to reduce the risk of losing trust in crypto. He concluded that although banks and trust companies have a long history of successfully safeguarding assets and custody, crypto’s technology and associated governance with tokens presents a host new issues that warrant careful analysis and consideration.
Related: US lawmaker Jerome Powell hints at future crypto legislation. Fed to release soon report on digital currency
Last week, Federal Reserve Chair Jerome Powell said that the agency would release a new report about digital currencies at its confirmation hearing. However, it wasn’t quite where they needed it to be.
Soon, new legislation regarding digital currency
— Tom Emmer (@RepTomEmmer), January 11, 2022
Cointelegraph reported that Powell spoke out about ongoing changes in monetary policies. This is expected to include policy regarding the potential rollout of a digital currency central bank in the United States.
“The report is really ready to go, and I would expect that we will drop it — I hate it to repeat it — in the coming weeks.”