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.
Good to hear from Acting Comptroller @USOCC Michael Hsu. #IIBAWC2023 pic.twitter.com/SWFGaUC0yv
— IIB (@IIBnews) March 6, 2023
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.
Acting Comptroller of the Currency Michael J. Hsu discusses the failure of the Bank of Credit & Commerce International in 1991 that led to significant changes in how global banks are supervised & its similarities to the crypto exchange FTX. Learn more at https://t.co/HD1T3KHcss pic.twitter.com/7e45zgMbE6
— OCC (@USOCC) March 6, 2023
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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