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Acting head of US OCC advocates for consolidated global supervision of crypto industry

During his speech, Hsu cited the bankruptcy of FTX as an example of why a consolidated "home" regulator is needed in the industry

Shashank Bhardwaj
Published: Mar 10, 2023 05:38:45 PM IST
Updated: Mar 10, 2023 05:43:14 PM IST

Acting head of US OCC advocates for consolidated global supervision of crypto industryImage: Shutterstock

While giving a speech at the Institute of International Bankers conference in Washington, D.C. on March 6th, the acting head of the Comptroller of the Currency (OCC) in the United States, Michael Hsu, suggested that crypto companies that operate in multiple countries should be regulated by a single "home" regulator in order to prevent them from trying to evade regulations by playing games.

The OCC is a part of the Treasury Department and its primary responsibility is to regulate banks in the United States with the goal of maintaining a secure banking system.

During his speech, Hsu drew on traditional banking practices to provide insights for the crypto industry on how to maintain trust on a global level. 

Hsu argued that if a crypto company operates in multiple jurisdictions without a single regulatory entity overseeing them, they could engage in activities that skirt regulations and conceal their true level of risk. 

Hsu believes that a consolidated home country supervisor is needed to oversee global crypto players to determine which ones are trustworthy and which ones are not. He emphasised that currently, there is no consolidated supervision of any crypto platforms.

During his speech, Hsu cited the bankruptcy of FTX as an example of why a consolidated "home" regulator is needed in the industry. 

Hsu compared FTX to the defunct Bank of Credit and Commerce International (BCCI), a global bank that was discovered to be involved in numerous financial crimes. 

According to Hsu, the fragmented supervision of both companies meant that no single authority or auditor could gain a comprehensive and cohesive understanding of them since they operated in multiple countries without a framework for information sharing between regulators. 

By appearing to be present everywhere and structuring entities in multiple jurisdictions, they were effectively nowhere and could evade meaningful regulation.

According to Hsu, trust is a delicate and easily lost element in the crypto industry, just as it is in traditional banking. Hsu believes that regulatory coordination and supervisory collaboration can help reduce the risks associated with losing this trust.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash