The Crypto Working Group of the Financial Stability Board (FSB) convened on February 22nd, where the Acting Comptroller of the Currency for the United States, Michael Hsu, delivered the opening remarks. Hsu expressed his thoughts on the importance of cooperation and collaboration in global supervisory activities.
During his speech, Hsu dedicated a significant portion to discussing the Bank of Credit and Commerce International (BCCI), an international bank that closed down in 1991 following a seven-country operation against its involvement in money laundering and other financial crimes. Prior to its closure, BCCI had established offices in more than 72 countries. Hsu drew a parallel between BCCI and FTX, highlighting that both entities lacked a single supervisor, and their parent holding companies were not subject to regulation in the jurisdiction where they were chartered. The downfall of BCCI prompted the implementation of stricter supervision for international banks, resulting in the enactment of the Foreign Bank Supervision Enhancement Act (FBSEA) in the United States.
The FBSEA granted U.S. banking supervisors access to information about foreign banks and paved the way for similar legislation globally. While the FSB has developed a comprehensive regulatory framework for crypto asset activities, it has encountered limited success. Hsu noted that the crypto industry continues to resist what it perceives as excessive or improper regulation and oversight, while different jurisdictions compete to attract crypto businesses. Hsu emphasized the FSB’s principle of “same activity, same risk, same regulatory outcome” and acknowledged that the competition among jurisdictions provides crypto firms with leverage. He further highlighted that currently, no crypto platforms are subject to consolidated supervision.
Concluding his remarks, Hsu addressed the topic of tokenization. Earlier in the month, the Office of the Comptroller of the Currency organized a symposium on the tokenization of real-world assets and liabilities. The keynote speaker, a representative from the Bank for International Settlements, emphasized the practicality of tokenization without the use of blockchain technology. Hsu urged for a thorough examination of the financial stability profiles of different scenarios involving tokenized real-world assets.
In other news, MakerDAO is planning to bring back the “DeFi summer,” as Rune Christensen discusses in an article.