By Shelly Melancon (Switzerland)
The man currently heading the office of the comptroller of the currency in the USA, Micheal Hsu, has expressed his opinion regarding how crypto-related companies can be run. While speaking during a conversation with Philadelphia’s reserve bank, Hsu opined that the best regulatory policy for the crypto industry is a collaboration between all the financial watchdogs in the country. Hsu further said that crypto-related companies can easily avoid regulations as things stand now so long they use subsidiaries.
Detailed Supervision Through Collaboration
Hsu said, “there is no detailed supervision over any crypto company. Hence, firms can exploit these supervisory gaps to create un-businesslike risks for undiscerning investors.” He further revealed that such detailed supervision would require the collaborative efforts of all financial watchdogs at the state and federal levels.
He suggested that his agency could provide insights on what such supervision would entail and how it can be implemented. However, he quickly added that no single regulatory body could handle this task as it is too enormous. “We can significantly reduce the boom-bust-recycle series.
But before this can be achieved, there must be a clear definition of synthetic banking, a proper guideline on actual crypto operations and attributes of a crypto-related company.” Hsu had earlier called on the financial watchdogs to learn from the 2008 real estate crisis and apply them to avoid falling into similar pitfalls. Yet, the number of crypto users in America keeps rising daily.
A Crisis That Could Have Been Averted
Hsu reinforced his opinion with the financial crisis currently experienced by an American insurance group’s subsidiary. He said that detailed supervision would have averted the kind of problem that the subsidiary is facing. He has been the OCC head in an acting capacity since May, after his appointment by the Treasury Secretary.
However, President Biden has appointed a new chief for this agency in the person of Saule Komarova. Part of Omarova’s nomination is an appearance before the senate banking committee on November 18.
SEC Scrutinizes BlockFi’s Crypto Lending Products
The SEC would like to determine whether these interests should be deemed as securities. If yes, then they would need to register with the financial regulator. The SEC’s position is that if any investor expects a profit from an investment, then such investment would be under the regulatory oversight of the SEC.
BlockFi’s crypto lending products offered almost 10% annual yields for investors compared to traditional banks with an average of 0.07% interest for savings. BlockFi and similar firms can even pay higher interests because some investors won’t mind paying higher fees to access more profitable coins.
More than $45B has been generated by firms that offer crypto lending products. While sec is yet to accuse BlockFi of any misconduct, some states have already started blocking any BlockFi-related transactions. They consider the firm’s products as illegal and lacking consumer protection. However, BlockFi has officially disclosed that it is in discussion with financial watchdogs from these states to affirm the legitimacy of its products.
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