In remarks at an industry event today, Acting Comptroller of the Currency Michael Hsu called for coordination between regulatory agencies to address the significant changes that are taking place in the banking industry, particularly those related technology, payments and the rise of cryptocurrencies and decentralized finance.
With regard to cryptocurrencies and decentralized finance in particular, Hsu acknowledged that controlling growth in this area “is challenging given their nature and in light of market demand,” but emphasized that “it is imperative that financial regulators work together to ensure that crypto/defi activities that take place within the banking system or are facilitated by banks are trustworthy. Innovation is important, but safeguarding trust is paramount.”
Hsu added that “coordination among all financial regulators will also be needed in the future to ensure a level playing field and limit regulatory arbitrage and to keep shadow banking at a safe distance from the regulated financial system. These goals cannot be achieved if the financial regulatory agencies, including state banking supervisors, do not work together. Public trust in bank regulators will rise or fall depending on our ability to do so.”
