Michael Hsu, the interim director of the United States Office of the Comptroller of the Currency (OCC), intends to close oversight loopholes for cryptocurrency firms.
Hsu urged for unified supervision for crypto enterprises in public comments before the Federal Reserve Bank of Philadelphia on Tuesday, in which regulators or an approved group may oversee a company and its subsidiaries to limit risk. According to Hsu, the existing structure permits crypto holding firms to possibly skirt restrictions by forming subsidiaries.
“There is no broad centralized supervision of any crypto company,” Hsu stated. “This implies that there are oversight gaps, and dangers can develop outside of regulators’ sight and reach.”
This strategy, according to Hsu, would necessitate greater collaboration between federal and state regulators, as well as “less regulatory rivalry” and “more interdependence.” He proposed that the OCC lead the way in identifying “where the line for comprehensive, consolidated supervision should lay” and how to execute it as a starting point, but he emphasized that the task was too big for any single regulatory body to handle:
“If we can define synthetic banking, determine which crypto activities should be separated, and identify the attributes of crypto firms warranting consolidated supervision, we may be able to temper the excesses of the boom-bust-reform cycle. The goal is not to stop business cycles, but to maintain trust.”
As the number of users in the United States continues to expand, the OCC’s head has previously asked the sector to utilize “learned from the 2008 crisis” to perhaps prevent some of the hazards associated with crypto. He mentioned an uncontrolled subsidiary of insurance behemoth American International Group, which was at the core of the financial crisis, as an example of an issue that could have been prevented with more centralized oversight.
Hsu was named interim director of the OCC by Treasury Secretary Janet Yellen in May, but President Joe Biden has since appointed longtime policy advisor Saule Omarova to the position. As part of her nomination, Omarova will testify before the Senate Banking Committee on Nov. 18.
