A US Treasury official is worried that the crypto industry is growing too fast and becoming too dangerous without proper regulation.
Michael J. Hsu is the Acting Comptroller of the Currency. Mr. Hsu became Acting Comptroller of the Currency on May 10, 2021, upon his designation as First Deputy Comptroller by Secretary of the Treasury Janet Yellen pursuant to her authority under 12 USC 4.
Michael’s concerns are in the wake of the collapse of UST and the Terra ecosystem that led to the de-pegging of UST from the one-to-one arrangement with the USD.
During a recent DC Blockchain Summit, he mentioned the de-pegging of UST from USD, saying that this event should be a clear pointer that there need to be regulations in place if the blockchain technology is to achieve its objective.
However, the director expressed his pleasure that the effects of the de-peg didn’t spill over to the banking system. Hsu aimed at yield farming, calling it a type of Ponzi that consumers should be protected from. UST investors were enticed with huge returns during its peak, running up to 20% of their stakes.
Hsu said,
“Yield farming today may have more in common with Ponzi schemes than productive innovation; hype-driven economy presents real challenges for those truly interested in productive innovation in protecting consumers.”
While Hsu’s approach in the talks was a bit more aggressive than other speakers, there was still a general consensus that the crypto industry needs strong regulatory policies to prevent such events as UST and Terra’s collapse.
He said that OCC would take a conservative approach toward crypto:
“The OCC will continue to take a careful and cautious approach towards crypto in order to ensure the national banking system is safe and sound.”
As a matter of fact, the lack of proper legal guidelines has hindered the crypto industry from growing to its potential because some institutions choose to stay away. Those getting in are primarily interested in direct investments rather than building utility. The lack of clear regulations has left many potential investors in limbo.
Binance’s head of tax, Sulolit Mukherjee, was among the speakers at the Summit. He said,
“The priority now…is responsible innovation. Good actors and institutional investors are waiting for more clarity in the space.”
