04.04.2024

The acting head of the OCC compared crypto asset brokers to a corrupt bank

The Financial Stability Board’s (FSB) Cryptocurrency Working Group met on February 22. Acting U.S. Comptroller of the Currency Michael Xu gave opening remarks at the meeting and shared his thoughts on cooperation and collaboration in global supervisory activities.

“Acting Comptroller Michael J. Xu emphasizes the importance of protecting trust in banking since 1863,” announced the Acting Head of the OCC (@USOCC) on February 22, 2024.

Xu devoted much of his short speech to Bank of Credit and Commerce International (BCCI), an international bank that closed in 1991 after a seven-country operation to combat money laundering and other financial crimes. BCCI had offices in more than 72 countries before it closed.

“BCCI’s history has parallels with FTX and other failed crypto-asset intermediaries,” Xu said.

Like BCCI, FTX had no single supervisory authority and its parent holding company was not subject to regulation in the jurisdiction in which it was registered. The collapse of BCCI led to increased supervision of international banks, Xu said. In the US, the Foreign Bank Supervision Enhancement Act (FBSEA) was one such enhancement.

The FBSEA gave US banking supervisors access to information on foreign banks and led to similar legislation around the world. The FSB has a comprehensive regulatory framework for crypto-asset activity, but has had little success.

“The crypto industry continues to resist what it sees as inappropriate or overly burdensome regulation and oversight, while jurisdictions continue to compete for crypto business,” Xu said.

Xu emphasized the FSB’s principle of “same activity, same risk, same regulatory outcomes” and noted that competition between jurisdictions gives crypto firms leverage.

“Although the underlying blockchain technology is supposedly trust-resistant, almost all cryptocurrency transactions are conducted through intermediaries that users must trust,” he added.

These are common themes for Xu, who noted a year ago that “no crypto platform is currently subject to consolidated oversight. Not a single one.”

Xu concluded by talking about tokenization. Earlier this month, the Office of the Comptroller of the Currency held a symposium on tokenization of real assets and liabilities. The keynote speaker, a representative from the Bank for International Settlements, emphasized the practicality of tokenization without blockchain. Xu called for a close look at the “financial stability profiles of various scenarios” for tokenized real assets.

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Коля Мельниченко

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