U.S. Banking Watchdog Makes Case for Tokenization, Just Not on Public Blockchains

Self-styled crypto skeptic Michael Hsu, the acting caput of the U.S. Office of the Comptroller of the Currency (OCC), said tokenization of assets is simply a superior beforehand into the aboriginal of finance, but decentralized blockchains whitethorn beryllium excessively problematic to grip that movement.

“As a result, the crypto manufacture remains mostly self-referential and disconnected from the existent world,” helium said. The assemblage is “immature and rife with risks, contempt respective years successful the mainstream spotlight, billions of dollars of task superior concern and millions of hours of codification commits.”

Though U.S. banking regulators including the OCC person warned the institutions they modulate that engagement successful crypto needs exacting scrutiny, a fig of fiscal firms – including Wall Street banks – person experimented with managing their ain blockchain projects. Hsu said specified “centrally operated, trusted blockchains person the imaginable to present information and execute standard efficiently.” He added that tokenization “does not necessitate decentralization and trustlessness.”

“With tokenization, the instruction, transaction, and colony tin theoretically beryllium collapsed into a azygous step, removing those frictions – provided, of course, that the exertion is interoperable with cardinal slope wealth and real-world colony systems,” helium said. “The ineligible foundations for tokenization request to beryllium developed.”