OCC Chief Hsu Says Regulation Could Boost Stablecoin Innovation

Regulating stablecoin issuers similar banks could promote innovation successful the crypto industry, according to apical U.S. banking regulator Michael Hsu.

Speaking astatine an lawsuit connected Thursday, Hsu – the acting comptroller of the Office of the Comptroller of the Currency (OCC) – told attendees that accrued regulations for the stablecoin manufacture could besides marque innovations longer-lasting.

“While innovation thrives successful uncertain environments, coagulated foundations tin help,” said Hsu. “Especially erstwhile it comes to wealth and trust.”

As the stablecoin marketplace continues to grow, surpassing a $150 cardinal marketplace cap past year, lawmakers and regulators are becoming progressively acrophobic astir the quality to modulate the booming manufacture and the contagion risks from a imaginable tally connected stablecoin issuers successful the lawsuit of a marketplace collapse.

“The maturation and mainstreaming of crypto means that a stablecoin tally would not conscionable interaction those straight invested successful it,” Hsu said Thursday. “There would beryllium collateral damage. And the imaginable scope of that harm volition proceed to turn arsenic agelong arsenic crypto expands.”

“Fortunately, we person an effectual instrumentality to mitigate tally risk: slope regulation.”

Hsu’s telephone to enforce bank-like regulations connected stablecoin issuers echoes akin recommendations made by the President’s Working Group connected Financial Markets (PWG) successful its stablecoin study published past November. The PWG’s report urged Congress to enact a instrumentality that would dainty stablecoin issuers similar banks – though the study did not spell into item astir however this would beryllium done – a proposal that has been met with bipartisan pushback connected Capitol Hill.

Hsu’s abrupt fondness for crypto innovation is simply a departure from comments helium made connected CoinDesk TV past November, erstwhile helium said that changeless innovation successful the stablecoin abstraction was “not what you want.”

“You privation your wealth to beryllium unchangeable and reliable, you privation it to beryllium determination successful bully times and atrocious times and not person to deliberation astir it,” Hsu said connected CoinDesk TV. “If you innovate excessively overmuch successful that space, you’re going to get a wide scope of outcomes that immoderate of which are not going to beryllium good.”

Hsu’s tenure arsenic acting comptroller of the OCC has been marked by a much ambivalent cognition towards cryptocurrencies than that of his predecessor, Brian Brooks, nether whose enactment the slope regulator issued guidance aimed astatine bringing the crypto manufacture into the fold of the greater fiscal system.

When Hsu took office past May, helium ordered a reappraisal of each the crypto-related guidance issued by the OCC nether Brooks.