Friday, March 29

Comptroller of the Currency believes that banking regulation would give credibility to stablecoins


US banks could hold and maintain supervised stablecoin reserves. This was announced by the OCC (Office of the Comptroller of the Currency) on January 13 at a roundtable on “the future of crypto assets and regulation” at the British-American business transatlantic finance forum.

At the meeting, Michael Hsu, who is the acting director of the OCC, Catalogue to stablecoins as “the oxygen of the cryptocurrency ecosystem”. This is said because the value of fiat-collateralized stablecoins, also called “stable currencies”, remains equal 1 to 1 with that of a fiduciary currency such as the dollar.

In this way, stablecoins lack the price volatility that characterizes cryptocurrencies like bitcoin (BTC). As reported by CriptoNoticias, for example, those who bought bitcoin once a month during the last year, increased their funds by almost 40% after the increase in the price of the cryptocurrency. This does not happen with stablecoins because they keep their value stable.

The OCC enters the process of regulating cryptocurrencies

Michael Hsu said that dollar-pegged stablecoins such as tether (USDT), USD coin (USDC) or binance USD (BUSD) could be vulnerable if people stop trusting them.. He expressed that the risk is that their adoption will slow down or even decrease due to the fear, uncertainty and doubts that exist in the minds of cryptocurrency users.

Vulnerabilities that lead to a run generally don’t suddenly appear out of the blue. They build up over time and are largely ignored, until a small group of participants feel the risk of the queue, get nervous, and quietly start to walk away.

Michael Hsu, acting director of the OCC (Office of the Controller of the Currency).

Therefore, he proposed a policy that could solve this situation. The controller hinted that they could be integrated within the regulatory margins of the OCC, which is responsible for regulating and supervising the national banks of the United States. The official expressed in this regard: “banking regulation would give credibility to the stable part of the stablecoins (thus referring to the supporting asset)”.

However, the curious thing is that the scenario of uncertainty that the official poses looks very different from the real one. The current context reveals that the adoption of stablecoins is on the rise. According data of CoinGecko, the market capitalization of the three most purchased stablecoins (USDT, USDC and BUSD) increased 356% in one year.

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Right now, USDT’s market capitalization is $78 billion, USDC’s is $45 billion, and BUSD’s is $14 billion. Even so, Michael Hsu indicated that, “if the tide went out, the reserves would be supervised and examined”, in case the stablecoins were regulated by banking agents.

Michael Hsu believes that banking regulation would give stablecoins credibility. Source: Twitter.

The OCC director added: “While innovation thrives in uncertain environments, strong foundations can help. Especially when it comes to money and trust.” It would be a “win-win” for those who use them and the cryptocurrency ecosystem, he stated.

His current position on stablecoins would go against the one given by the US Federal Reserve in November., which is opposed to banks issuing them. As CriptoNoticias previously reported, Michael Hsu has stated for almost a year that one of his priorities is to review his policies regarding cryptocurrencies.



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