Michael Hsu, the acting Comptroller of the Currency, said in an interview that authorities might be spending too much time and effort thinking about cryptocurrencies rather than determining the best method to regulate other forms of fintech.
“We’re spending too much time on crypto,” he said. “It’s interesting, it has thorny issues… but relative to other technology and banking issues, I think we’re now kind of overweight crypto.”
New fintech and banking relationships
He claimed that Crypto is simply taking up a lot of people’s mental space, both on Capitol Hill and in the regulatory world.
The U.S. bank regulator also claimed that his caution over banks’ collaborations with fintech is not intended to hinder such relationships but rather to express his worry that businesses must accurately assess their risks.
“Look, bank-fintech partnerships, they’re here to stay. I’m not trying to do away with them,” Hsu noted. “This is the future, so let’s do the future right.”
Earlier in September, Hsu had warned that the growth of fintech services and digital banking could eventually lead to financial concerns and a crisis. Another Fed regulator also recently advised banks working with cryptocurrency startups to be aware of increased liquidity risks in these setups.
Federal Reserve’s vice chair of supervision Michael Barr explained, “When a bank’s deposits are concentrated in deposits from the crypto-asset industry or from crypto-asset companies that are highly interconnected or share similar risk profiles, banks may experience deposit fluctuations that are correlated and closely linked to broader developments in crypto-asset markets.”
Changing the crypto regulatory environment
U.S. Financial Accounting Standards Board (FASB) has noted that businesses that wish to use cryptocurrency should maintain their asset stock on the books using fair-value accounting.
Meanwhile, it’s thought that the long-awaited implementation of cryptocurrency rules in the United States could serve as the impetus for the subsequent wave of institutional adoption.
On a global scale, OECD has presented Crypto-Asset Reporting Framework (CARF) to G20 countries to usher regulations for the emerging technology. Co-Founder of India-based crypto exchange WazirX, Nischal Shetty, told BeInCrypto, “One of the key elements that stand out to me is the synchronization between domestic and international application of the framework that is being envisioned.”
“It will bring forth a uniform compliance structure from all Crypto service providers and possibly remove individual tax impositions based on domestic laws. This will not only bring in more transparency but a swift record of transactions and their subsequent tax gains across the globe,” he added.
That said, Europe is also looking ahead to approve the landmark Markets in Crypto-Assets (MiCA) regulations. However, the Securities and Markets Authority in Europe has outlined potential financial risks of the asset class.
The ESMA has also called for international standard-setting bodies like the Financial Stability Board and the International Organization of Securities Commissions (IOSCO) to assist, given the global nature of the crypto-asset market.
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