Introducing the Concept of Consolidated Supervision
In the wild west of cryptocurrencies, regulatory gaps are creating an unpredictable landscape for companies engaging in crypto activities. Michael Hsu, the acting head of the United States Office of the Comptroller of the Currency (OCC), urges a fresh approach to these challenges. He advocates for consolidated supervision—a one-stop-shop for regulations overseeing not only crypto firms but also their subsidiaries, ensuring that no rogue crypto company can evade scrutiny.
The Current State of Crypto Regulation
As it stands, crypto companies can twist and turn through a maze of regulations. Hsu pointed out the inadequacies, stating, “No crypto firm is subject to comprehensive consolidated supervision.” This means risky activities can go unnoticed until it’s too late. Picture a nonchalant teenager sneaking out of the house while the parents sleep—a bit careless, don’t you think?
It Takes a Village: Cooperation is Key
Hsu’s vision isn’t one that can be achieved in a solo act; it requires a duet—federal and state regulators must collaborate. He emphasizes the need for “less regulatory competition and more interdependence” among different regulatory bodies. Imagine a disorganized group project where nobody’s on the same page! To smooth out oversight, regulators must work together in harmony like a well-rehearsed band.
Learning from Past Mistakes
Hsu isn’t just pulling ideas out of thin air. He’s advocating for learning from the 2008 financial crisis, where unregulated subsidiaries wreaked havoc. He mentioned American International Group’s notorious unregulated wing, which could have been better managed with consolidated supervision. If the financial landscape had seen earlier oversight, we might not have faced such catastrophic consequences. Hsu’s thoughts echo like a cautionary tale of what could happen if we don’t change course.
The Big Picture: A Vision for the Future
Ultimately, Hsu envisions clarity in defining synthetic banking, establishing a line for comprehensive supervision, and identifying which crypto activities and firms merit this level of oversight. His message is clear: it’s not about stopping business cycles, but fostering trust in an environment filled with uncertainty. If we can achieve this, we might just temper the rollercoaster known as the crypto market.
A Leadership Transition and What Comes Next
While Hsu is steering the ship for now, the tides may change soon with President Joe Biden’s nomination of Saule Omarova as the new head of the OCC, set to speak before the Senate Banking Committee shortly. Will she carry Hsu’s torch, or will the regulatory ship steer in a different direction? Only time will tell!
