In the detailed remarks given at the American Fintech Council’s 2021 Policy Summit, Michael J. Hsu, the acting Comptroller of the Currency, called for increased crypto regulation of universal cryptocurrency companies. In his statement, the regulator singled out Tether and Bitcoin as being the riskiest operators in the blockchain space.
“Large, universal crypto firms—especially issuers of highly-circulated stablecoins—should embrace comprehensive, consolidated supervision. At the same time, federal and state bank regulators should prioritize the development of policies, staff, and supervisory approaches to bring such firms safely into the bank regulatory perimeter. This would differentiate safe and sound crypto firms from those that are regulated only partially and have a history of control lapses, such as Binance and Tether.”
Notably, the Office of the Comptroller of the Currency is tasked with the crypto regulation oversight of federally chartered banks that operate within the US. Hsu also declared:
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“The rapid expansion and mixing of wholesale and retail activities at some crypto firms raise the question of whether there ought to be Glass-Steagall-like separation of activities in the crypto space.”
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By description, Glass-Steagall was a 1933 federal law that protected investment and commercial banking. However, it was repealed in 1999. Hsu concluded by stating:
“In the cryptocurrency space, the rapid growth in users and total market value has only been matched by the growth in scams and consumer complaints. ‘Move fast and break things is a common mantra in tech. In the financial services context, it is important to remember that those “things” are people and their money.”
In October 2021, OCC nominee Saul Omarova was pushed to turn over her college thesis on Marxism by Senate Republicans. In coordination with other regulators, the OCC is expected to issue guidance to banks on how to hold crypto assets soon. Hsu started reviewing Tether’s commercial paper reserves in January.