The head of the Office of the Comptroller of the Currency (OCC) said cryptocurrency and decentralized finance (DeFi) activities among others are factors contributing to the disintermediation of the banking system.
Acting Comptroller of the Currency Michael Hsu presented remarks on the issue of banking trust on Sept. 15 at a meeting of the Exchequer Club, a gathering of senior economic and financial policy experts based in Washington, D.C.
In his speech, Hsu outlined his office’s top priorities as eliminating inequality, adapting to digitalization, combating climate change, and avoiding complacency.
The head of the Office of the Comptroller of the Currency (OCC) listed rising cryptocurrency-related and decentralized finance (DeFi) activity among the innovations driving changes in banking, disintermediating it in novel ways when speaking about the regulatory challenges arising as a result of financial system digitization.
Previous failings of US financial regulators, such as those that allowed the 2008 financial crisis to occur, were linked to the “siloed” nature of separate regulatory agencies‘ functioning, according to Hsu.
Treasury, the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, and his own agency collaborated to coordinate regulatory policy around digital assets, according to the OCC boss.
However, except for the report on stablecoins coming later this fall, the OCC director did not specify any concrete results of the working group’s activity.
Hsu specifically stated that authorities must “ensure that crypto/DeFi operations that occur within the banking system or are enabled by banks are trustworthy.”
Given that the majority of decentralized finance activity occurs outside of the regulated banking system, it’s unclear whether Hsu’s comments represent the OCC’s desire to extend its jurisdiction to DeFi platforms.
The OCC is a separate office under the US Department of the Treasury that is in charge of overseeing all national banks and federally licensed foreign bank branches in the US. In May of this year, Michael Hsu was named acting Comptroller of the Currency.
