On May 24, 2022, Acting Comptroller to the Currency Michael J. Hsu spoke at the DC Blockchain Summit 2022 where he shared his observations on crypto from a bank regulator’s perspective. A self-confessed crypto skeptic, Hsu talked about the need to reset and recalibrate the problems that the crypt industry is trying to solve.
Hsu shared three high level observations from a bank regulator’s perspective. First, he said that the recent events of the past several months have revealed deep vulnerabilities in the crypto system. These vulnerabilities include (1) crypto is highly fragmented and prone to hacks; (2) contagion risks are real; and (3) Custody and ownership rights are underdeveloped for the size, scope, and ambitions of the industry. His second observation was that recent events have shown the value of the OCC’s “careful and cautious” approach to banks seeking to engage in crypto activities. According to Hsu, the resilience of the traditional banking system to the recent events in crypto is due, at least in part, to federal bank regulators’ continued and intentional emphasis on safety and soundness and consumer protection.
Lastly, Hsu stated that hype is not harmless. Hsu said earlier in his speech that the crypto economy appears to be hype-based. Hsu believes that the hype and the associated vulnerabilities make the crypto space very dangerous for investors of modest means. Thus, the OCC is sponsoring a financial health discussion series to promote crypto literacy and education.
A copy of Hsu’s full remarks is available here.