Federal authorities must cooperate in order for crypto to be properly regulated, according to the U.S. Office of the Comptroller of the Currency (OCC).
Michael Hsu, Acting Comptroller of Currency, says as crypto platforms and adoption grow, so do their risks.
Because of the risks, he says agencies need to collaborate since no single entity is capable of accurately regulating them.
“Large crypto intermediaries today may have multiple subsidiaries subject to different regulators, but no one regulator is able to understand how the firm as a whole operates, how much risk it is taking, and whether it is operating in a safe, sound, and fair manner.
As large crypto intermediaries expand, engage in a wider range of activities and risk-taking, and deepen their interconnectedness with the traditional financial system, the risks from this lack of comprehensive consolidated supervision will increase, as will the need for interagency collaboration and coordination.”
Hsu points to previous initiatives of interagency cooperation in order to regulate the digital asset market. Last year, the OCC teamed up with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) to focus on bank-related crypto policies.
“The interagency team developed a common vocabulary, identified key risks related to crypto activity engagement by banks, and laid out a roadmap for areas and activities where supervisory clarity is most warranted. At the top of the list is crypto custody, which (like stablecoins) is foundational to crypto operating at scale safely.
While banks and trust companies have a long and successful history of custodying and safeguarding assets, the technology underlying crypto and the associated governance with certain tokens present a host of novel issues warranting careful analysis and consideration.”