Posted 1 month ago | by Catoshi Nakamoto
The acting head of the Office of the Comptroller of the Currency (OCC), Michael Hsu expressed that digital assets and decentralized finance (DeFi) are among contributing factors resulting in the removal of middlemen from the financial system.
OCC Says That Financial Specialists Need To Safeguard Trust In Banking
Hsu made the comments while speaking at an elite meeting called the Exchequer Club — a group of senior economic and financial policy specialists headquartered in Washington, D.C. Hsu expressed that the group needs to “safeguard trust in banking.”
In the speech, Hsu communicated that the OCC had four key priorities — reduce inequality, adapting to digitalization, acting on climate change, and defend against complacency.
“As we all know, it is expensive to be poor. This can create a vicious cycle. The perpetuation of inequality is a key problem, not just for our society but for trust in the banking system because of the role banks play in this,” Hsu said. Adding, “To date, banks have both helped and hurt. My focus is to tilt the balance more clearly in favor of helping poor and working Americans obtain and build wealth – specifically, by strengthening the Community Reinvestment Act (CRA), by bringing so-called “credit invisibles” into the financial mainstream, by supporting and revitalizing minority depository institutions (MDIs), by reforming bank overdraft programs so that they empower rather than exploit consumers, and by vigorously enforcing fair lending laws, among other efforts.”
Hsu revealed at one point in his address that there were a number of significant challenges that need to be overcome including regulatory hurdles emerging as a result of the ongoing digitization of the financial system. The head of the Office of the Comptroller of the Currency (OCC) listed rising cryptocurrency-related and decentralized finance (Defi) activity among the innovations driving changes in banking, disintermediating it in unique new ways.
In his speech, Hsu admitted previous failures of U.S. financial regulators including those that lead to the 2008 financial crisis. He even, warned that something similar could happen today due to “changes in banking being driven by the mass adoption of digital technology, innovation in payments, and an explosion in cryptocurrency activities and decentralized finance (defi) where banks are bypassed.” Hsu further expressed that “banking is again being disintermediated but in a different way. Instead of securities firms and capital markets, it is fintechs, technology platforms, crypto, and defi. Instead of lending, it is payments. Instead of financial engineering, it is application programming interfaces, machine learning, and distributed ledgers,” Hsu said.
However, the OCC chief praised the collaborative ongoing work by the United States Treasury, the Federal Reserve, the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Federal Deposit Insurance Corporation (FDIC), for organizing regulatory policies around digital assets.
Although, Hsu failed to mention any further information about the working group besides referencing that they are working on a joint report on stablecoins to be published later this year. It’s important to note that, Hsu stated that it is essential for regulators to “Ensure that crypto/Defi activities that take place within the banking system or are facilitated by banks are trustworthy.”
This is a rare look into meetings with financial policymakers who will shape the crypto digital asset industry. In another speech this week, Hsu warned investors that cryptocurrencies may be “fools gold.”
At an event for The Blockchain Association, Hsu expressed to the attendants that the crypto industry gave him memories of the financial crisis in 2008. Reflecting back he said:
“I have seen one fool’s gold rush from up close in the lead up to the 2008 financial crisis,” he said. “It feels like we may be on the cusp of another with cryptocurrencies (crypto) and decentralized finance ().”
Biden Set To Nominate New OCC Head This Week?
This comes as news has come out that Biden plans to nominate Saule Omarova, a law professor who has been critical of cryptocurrencies and advocated for the government to have a larger role in banking. Bloomberg reported the news citing three sources familiar with the situation. If confirmed, she would become the first woman to lead the agency.
Omarova wasn’t the only candidate being considered for the job, Democrats and the Biden administration previously wanted former Treasury official Michael Barr and law professor Mehra Baradaran for the position. However, they were dropped after the Democrats expressed that neither candidate was likely to gain enough support for confirmation in Congress.
The OCC is said to be an independent bureau within the U.S. Department of the Treasury that oversees all national banks and foreign banks. Hsu became the acting Comptroller of the Currency in May earlier this year when he was tapped by U.S. Treasury head Janet “felon” Yellen. Immediately after he took office, Hsu announced that he ordered his staff to review all pending matters and guidance issued under the Trump administration pertaining to currency.
This means that several laws passed by former OCC Brian Brooks may be scrutinized and not just laws but Trust Charters that were given to Anchorage, Paxos, and others to operate in the U.S. may be called into question.
Bitcoin is currently trading at [FIAT: $43,609.56] UP +3.6% in the last 24 hours according to Coingecko at the time of this report.