05.26.2022

OCC: Crypto – A Call to Reset and Recalibrate

05.26.2022
OCC: Crypto – A Call to Reset and Recalibrate

Acting Comptroller Hsu spoke at the DC Blockchain Summit 2022 about the vulnerabilities in the cryptocurrency framework and recent volatility with stablecoins.

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.1

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 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. I will say more on this in a bit.

Stepping back, though, I would like to share three high level observations from the perspective of a bank regulator.

The full speech can be read here.

Source: OCC

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