Earlier this month, acting Comptroller of the OCC, Michael Hsu, gave a thought-provoking speech before the British American Business Transatlantic Finance Forum. Comptroller Hsu discussed the mainstreaming of crypto despite regulatory and legal uncertainty and highlights the attention stablecoins are receiving from regulators, and the trust stablecoins users have in them.
He describes a scenario where there is a potential loss in that trust, potentially leading to a rise in run risk. To mitigate run risk, bank regulation is required. He notes, “Bank regulation would give credibility to the “stable” part of stablecoins”. To support the need for more regulation Hsu presents an interesting parallel between stablecoins and pre-Civil War banknotes which underscores that “strong, targeted federal regulation of money and banking can help establish a solid foundation for the economy enabling healthy innovation and growth”.