Acting Comptroller of the Currency Michael J. Hsu, a self-described “crypto skeptic,” said he is approaching the topic from a “bank regulator’s perspective,” and indicated obvious trepidation moving forward too rapidly and without airtight safeguards in place.
“As many of your members know, I have been a crypto skeptic. In speaking to the Blockchain Association last year, I warned of risks in the crypto space, including unexplainable and unsustainably high yields and ‘innovation’ for innovation’s sake,” Hsu said. “What has become clearer to me since then is that these developments are indicative of the crypto economy’s dependency on hype. Hype is needed to generate the interest and investment that are key to creating the ‘flywheel’ of growth that crypto projects seem to need to get off the ground.”
The summit, which was sponsored by the Chamber of Digital Commerce and took place Tuesday, May 24 in Washington D.C., comes amid great uncertainty surrounding the U.S. regulation of cryptocurrencies, especially with respect to the potential creation of a highly controversial central bank digital currency.
“Blockchain technology offers immense opportunities for business, government, and consumers. Its ability to improve processes, increase cost-efficiency, and promote transparency in numerous industries is transforming the ways in which we do business,” according to the Chamber.
Speakers at the event included Rep. Tom Emmer, co-chairman of the Congressional Blockchain Caucus, Rep. Stephen Lynch, chairman of the Task Force on Financial Technology, Sen. Kirsten Gillibrand and Commissioners Caroline Pham and Christy Goldsmith Romero of the Commodity Futures Trading Commission.
"Over the weekend, I chatted with @SwanSit at @veecon in Minneapolis about the future of web3 in the United States and government’s responsibility to not mess it up. Great to speak with an awesome, engaging audience. Remember: Your government works for you."
The acting comptroller of the currency also pointed to recent turmoil involving the TerraUSD stablecoin as an example of the dangers investor hype can bring on consumers, as well as the challenges associated with regulating the fiat-backed currencies.
“The recent collapse of the TerraUSD stablecoin and associated sell-off in crypto markets has shown that hype-driven growth can lead to bubbles, harm consumers, and crowd out productive innovation,” he added. “The TerraUSD holder stories are heartbreaking and a strong reminder that hype is not harmless.”
"I am working diligently with @sengillibrand to finalize bill text of our comprehensive digital asset legislation. Any language circulating online is an incredibly outdated version from March 1. Stay tuned for our release of the actual bill on June 7th!"
Hsu did express some optimism, too, though, as he laid out his expectations for the crypto market.
“There is real potential for positive and transformative change with digital assets. And ensuring inclusion and access to anyone willing to invest the time and effort to learn about those opportunities could facilitate wealth building for those typically shut out from such opportunities,” concluded Hsu. “However, the hype and the associated vulnerabilities noted above make the crypto space very dangerous for investors of modest means ... Given the massive inflow of venture capital dollars into the space, my fear is that the hype problem may get worse before it gets better.”