Monday, 20 March 2023

Crypto News

‘Home’ regulator could solve crypto’s ‘fragmented supervision’ issue: Comptroller

'Home' regulator could solve crypto's 'fragmented supervision' issue: Comptroller

Cryptocurrency firms operating multiple entities in different countries should be overseen by one consolidated “home” regulator to stop them from playing “games” aimed at skirting regulators, the acting head of the United States banking regulator has opined.

Michael Hsu, the Acting Head of the Comptroller of the Currency (OCC) made the comments in prepared remarks for the Mar. 6 Institute of International Bankers conference in Washington, D.C.

The OCC is a bureau within the Treasury Department that regulates U.S. banks and aims to ensure the safety of the country’s banking system. It has the power to permit or deny banks from engaging in crypto-related activities.

In his speech, Hsu provided “useful lessons for crypto” from traditional banking on how to maintain trust globally.

He claimed unless a crypto firm is regulated by one entity, those operating with businesses in multiple jurisdictions will “potentially play shell games” by arbitraging regulations and would subsequently be able to “mask their true risk profiles.”

“To be clear, not all global crypto players will do this. But 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.”

“Currently, no crypto platforms are subject to consolidated supervision. Not one,” he added.

The bankruptcy of crypto exchange FTX was used as an example of why the space needed a “home” regulator. Hsu compared the exchange to the equally-defunct Bank of Credit and Commerce International (BCCI) — a global bank that was found to be involved in a litany of financial crimes.

Hsu said the “fragmented supervision” of both firms meant no one authority or auditor could develop a “consolidated and holistic view” of them as they operated across countries with no framework for information sharing between authorities.

“By seemingly being everywhere and structuring entities in multiple jurisdictions, they were…

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