OCC Calls for International Cooperation on Crypto Rules

Regulators must collaborate at an international level to oversee crypto-assets such as cryptocurrencies, according to the Office for the Comptroller of the Currency (OCC).

In a speech to the Institute of International Bankers on March 6, acting comptroller Michael Hsu drew parallels between the collapse of crypto exchange FTX and the 1991 demise of the Bank of Credit and Commerce International (BCCI). The BCCI failure presaged increased international collaboration on bank oversight.

“While the details of FTX’s failure continue to unfold and not all of the facts have yet been revealed, there are striking similarities between BCCI and FTX,” Hsu said.

“Both faced fragmented supervision by a combination of state, federal, and foreign authorities. Both lacked a lead or ‘home’ regulator with authority and responsibility for developing a consolidated and holistic view of the firms.

“Both operated across jurisdictions where there was no established framework for regulators to share information on the firms’ operations and risk controls. Both used multiple auditors to ensure that no one could have a holistic view of their firms.”

While Hsu acknowledged that international regulatory work on crypto would have to be carried out “outside of banking regulatory channels”, he highlighted recent work by several bodies on crypto regulation.

Hsu joined other regulatory leaders in December in endorsing a framework and prudential standards for banks’ crypto-asset exposures proposed by the Basel Committee on Banking Supervision.

“The rapid progress by the Basel Committee paves the way for a more consistent international approach to this new asset type and should help level the playing field,” Hsu said.

The comptroller’s latest comments come as Silvergate Bank has shut down its cryptocurrency transfer service, Silvergate Exchange Network.

In a statement on its homepage, the bank said: “Effective immediately Silvergate Bank has made a risk-based decision to discontinue the Silvergate Exchange Network (SEN). All other deposit-related services remain operational.”

The bank has not given any further information about the move. It follows a wave of crypto companies cutting ties with Silvergate as it scrambles to recover from the cryptocurrency market turmoil of 2022 and the collapse of FTX.