OCC Acting Comptroller Argues That Bank Regulation Would Mitigate Crypto Risk

OCC Acting Comptroller Michael J. Hsu addressed the future of crypto-assets and potential benefits of banking regulation.

In remarks before the British-American Business Transatlantic Finance Forum, Mr. Hsu identified some of the risks associated with stablecoins and suggested that the regulation of issuers as banks could actually enable more durable innovation. He acknowledged the importance of stablecoins as a bridge between the fiat and crypto worlds, including stablecoins' pivotal role in decentralized finance. He also noted, however, that stablecoins may be susceptible to potential runs by investors if trust in these assets fades, especially those with "questionable and opaque reserve management procedures." He compared such a potential run on stablecoins to the 2008 financial crisis, where runs affected banks, securities firms, structured finance vehicles and money market funds.