Michael Hsu, the acting head of the Office of the Comptroller of the Currency (OCC) said during a Banking Policy conference that regulated banks should maintain a “careful and cautious” approach to crypto to prevent contagion that would undermine the U.S. economy.
The OCC, prior to Hsu’s appointment, had approved banks to offer crypto-related services. However, Hsu who has been a critic of the crypto industry led the agency to reverse the green light.
National banks and federal savings associations (FSA) intending to offer crypto must undergo stringent vetting processes to ensure that their activities will be performed in “a safe, sound and fair manner.”
According to Hsu, the approach saved the banks from direct exposure to the Terra ecosystem collapse that forced multi-billion crypto firms to file for bankruptcy. By contrast, the federally regulated banking system was largely unaffected.
“I believe this is due, at least in part, to the careful and cautious approach that we adopted and intend to maintain for the foreseeable future.”
Crypto to be regulated not banned
The OCC alongside other U.S. government agencies like the Fed and FDIC has been working to see that the crypto industry is duly regulated.
Earlier in May, the U.S. Congress introduced over 80 new bills to intensify its effort to bring regulatory clarity to crypto. The bill addressed issues spanning six categories, including crypto taxation, central bank digital currency (CBDC), and implications of either China or Russia’s use of crypto.
The U.S. SEC and CFTC also introduced a framework for hedge funds to report their crypto exposure. The regulators affirmed that hedge funds may not be stopped from adding crypto assets to their portfolio, however, it needs to be properly accounted for.
U.S. Congressman Brad Sherman also turned his bias against crypto by admitting that crypto has become too big and is unlikely that Congress will ban it.
“[Congress] didn’t ban it at the beginning because we didn’t realize it was important, and we didn’t ban it now because there’s too much money and power behind it.”
The crypto community, however, insists that crypto is unique and must be regulated differently as against SEC Chair Gensler’s view of treating crypto like the capital markets.