On Wednesday (15), speaking at a meeting of the Exchequer Club – which is a group of senior economic and financial policy professionals based in Washington, DC – interim currency controller Michael Hsu made comments on the topic of safeguarding confidence in the banking sector.
In his speech, Hsu pointed to reducing inequality, adapting to digitization, tackling climate change and protecting against complacency as his cabinet’s top priorities.
Speaking about the regulatory challenges emerging as a result of the digitization of the financial system, the head of the Office of the Comptroller of the Currency (OCC) listed the growing decentralized finance activity and related cryptocurrencies (DeFi) among the innovations driving change in the banking sector, disintermediating it in new ways.
Hsu attributed earlier failures by US financial regulators – such as those that made the 2008 financial crisis possible – to the “isolated” nature of the operations of various regulators. The head of the OCC further commended the collaborative effort of UnitedTreasury, the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation and his own office to coordinate regulatory policies around assets digital.
However, the head of the OCC did not mention any specific results of the working group’s activity beyond the report on stablecoins expected later this spring.
Notably, Hsu said it is necessary for regulators to “Ensure that crypto/DeFi activities that take place within the banking system or are facilitated by banks are trustworthy”. Given that most decentralized financial activity takes place outside the regulated banking system, it is unclear whether Hsu’s remarks can be interpreted as reflecting the OCC’s aspiration to extend its reach over DeFi platforms.
The OCC is an independent bureau within the US Department of the Treasury that is tasked with overseeing all domestic banks and federally licensed branches of foreign banks in the country. Michael Hsu became the currency controller in May of this year.
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