The meeting of the Crypto Working Group of the Financial Stability Board (FSB) took place on February 22. During the meeting, Michael Hsu, the Acting Comptroller of the Currency in the United States, delivered opening remarks and shared his thoughts on global supervisory activities and the importance of cooperation and collaboration.
Hsu dedicated a significant portion of his speech to discussing the Bank of Credit and Commerce International (BCCI), an international bank that closed its operations in 1991 following a multinational effort to combat money laundering and other financial crimes. Prior to its closure, BCCI had offices in more than 72 countries. Hsu drew parallels between BCCI and FTX, highlighting the fact that both entities lacked a single supervisor and their parent holding companies were not subject to regulation in the jurisdictions where they were chartered. The collapse of BCCI resulted in the implementation of stricter supervision of international banks, with the Foreign Bank Supervision Enhancement Act (FBSEA) being one of the notable outcomes in the United States.
The FBSEA provided American banking supervisors with access to information about foreign banks and served as a model for similar legislation in other countries. Despite the Financial Stability Board having a comprehensive regulatory framework for crypto asset activities, it has encountered limited success. Hsu acknowledged that the crypto industry remains resistant to what it perceives as excessive regulation and oversight, while jurisdictions continue to compete for crypto business.
Hsu stressed the importance of the FSB principle of “same activity, same risk, same regulatory outcome” and highlighted how competition among jurisdictions gives crypto firms significant bargaining power. He also pointed out that currently, no crypto platforms are subject to consolidated supervision.
In conclusion, Hsu discussed the topic of tokenization. The Office of the Comptroller of the Currency recently organized a symposium on tokenizing real-world assets and liabilities, where a representative from the Bank for International Settlements emphasized the practicality of tokenization without relying on blockchain technology. Hsu called for a thorough examination of the financial stability profiles of different scenarios involving tokenized real-world assets.