United States regulatory authorities may be signaling they will play a more active role in the regulation of crypto’s $1.5 trillion economy. Per a recent report by Financial Times, newly appointed OCC head Michael Hsu said he hoped US officials would work together to set a “regulatory perimeter” for cryptocurrencies.
While his comments are not crystal clear as to the next move which regulatory authorities of the United States are going to take, inter-agency cooperation is expected to help the United States carve out a clear message regarding the US’ stance on the cryptocurrency space.
“It really comes down to co-ordinating across the agencies[...] Just in talking to some of my peers, there is interest in co-ordinating a lot more of these things.”
Janet Yellen, United States Treasury Secretary, does not hide her aversion to cryptocurrencies like Bitcoin. She’s on record to have testified in a congressional hearing that she’s worried that bitcoin is “often used for illicit finance”. Fact-checking Yellen’s concerns shows that the volume of cryptocurrency transactions associated with ‘illicit finance” like terrorism, money laundering and ransomware has decreased when placed at par with previous years’ volume. She is however matching words with actions by installing a more circumspect OCC executive as compared with the Trump-era Brian Brooks, a former chief legal officer of Coinbase, a crypto exchange, who is now chief executive of Binance.US, a rival crypto exchange.
Michael Hsu wasted no time asking his staff to review a Trump-era decision, giving United States banks the go-ahead to offer crypto entities custody solution for their stablecoin assets last year. It is yet to be known if he will initiate policies to roll back this policy.
Although Hsu stated that there is “no turning back” from the blockchain technology innovations and explosive growth of use cases like DeFi, he does not think this development bodes well for the economy as it poses “to a large and less regulated shadow banking system”.
After enduring about two years of the bear season, cryptocurrencies picked up steam in October, with bitcoin price breaking above $63,000 in its ATH and others like DOGE pumping from $0.008 to over $0.61 in May. The Decentralised finance turf, a subsector of the cryptocurrency industry, has equally seen a Cambrian explosion in activities from just a mere $500 million TVL to over $160 billion in less than a year. Stablecoins like USDT and USDC played a significant role in the growth of the DeFi sector, significantly as the highly complaint USDC by Circle grew by over $22 billion in market cap.
Amid the boom, classical pump and dump schemes remain prevalent within the cryptocurrency space, with even bitcoin price plunging by more than half from its ATH within two weeks. Gary Gensler, the new chairman of the Security and Exchange Commission - SEC, continues to express concerns about the impact of horrific dips that the crypto industry has just faced on the United States citizens. In his views, the United States, through its agencies, must employ “similar protections to the exchanges where you trade crypto assets as you might expect at the New York Stock Exchange or Nasdaq”.
Crypto market continues to swing sideways, with BTC price hovering slightly above $34,000 and ETH trading below $2,500, with the total market cap dancing around $1.5 trillion.