The Crypto Working Group of the Financial Stability Board (FSB) convened on February 22nd. During the meeting, Michael Hsu, the Acting Comptroller of the Currency in the United States, delivered opening remarks and shared his thoughts on the importance of cooperation and collaboration in global supervisory activities.
Hsu primarily focused on the Bank of Credit and Commerce International (BCCI) in his brief speech. BCCI was an international bank that ceased operations in 1991 due to its involvement in money laundering and other financial crimes across seven countries. Prior to its closure, BCCI had offices in more than 72 countries. Hsu drew parallels between BCCI and FTX, highlighting that both entities lacked a single supervisor and that their parent holding companies were not subject to regulation in the jurisdictions where they were chartered. He explained that the collapse of BCCI resulted in intensified supervision of international banks and mentioned the Foreign Bank Supervision Enhancement Act (FBSEA) in the U.S. as one of the regulatory enhancements that followed.
The FBSEA granted U.S. banking supervisors access to information regarding foreign banks and paved the way for similar legislation worldwide. While the FSB has developed a comprehensive regulatory framework for crypto asset activities, it has encountered limited success in its implementation. Hsu noted that the crypto industry continues to resist what it perceives as excessive regulatory oversight, and jurisdictions are competing to attract crypto businesses.
Hsu emphasized the FSB principle of “same activity, same risk, same regulatory outcome” and highlighted that the competition among jurisdictions provides leverage to crypto firms. He reiterated his previous observation that no crypto platforms are currently subject to consolidated supervision.
In conclusion, Hsu discussed the topic of tokenization. The Office of the Comptroller of the Currency recently hosted a symposium on tokenizing real-world assets and liabilities, where a representative from the Bank for International Settlements emphasized the practicality of tokenization without blockchain technology. Hsu encouraged a thorough examination of the financial stability implications associated with different scenarios involving tokenized real-world assets.
Magazine: MakerDAO’s Strategy to Revive the “DeFi Summer” – Rune Christensen