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Acting Comptroller of the Currency Michael J. Hsu discussed in a newsroom event the necessity of building trust in global banking.
Acting Comptroller of the Currency Michael J. Hsu discusses the failure of the Bank of Credit & Commerce International in 1991 that led to significant changes in how global banks are supervised & its similarities to the crypto exchange FTX. Learn more at https://t.co/HD1T3KHcss pic.twitter.com/7e45zgMbE6
— OCC (@USOCC) March 6, 2023
Hsu spoke about various things, including the fall of the Bank of Credit and Commerce International (BCCI) in 1991. The BCCI event was considered the biggest ban fraud scandal, with estimated losses as high as $15 billion. The OCC Comptroller also highlighted that it had a major impact on how banks were supervised.
Hsu also continued his conversation to highlight the similarities between the downfall of the BCCI and the cryptocurrency exchange FTX. He also spoke about what lessons can be derived from these two incidents for policymakers and cryptocurrency advocates.
Acting Comptroller Hsu said:
To be trustworthy, global crypto firms need a lead regulator who has authority and responsibility over the enterprise as a whole.
Hsu continued that until there is a lead regulator, cryptocurrency firms with subsidiaries in various jurisdictions will begin to arbitrage regulations in the local jurisdictions and play their sneaky tactics. In addition, he expressed support for the implementation of strengthened Basel III-compliant regulatory capital requirements.
The collapse of FTX was considered one of the most devastating cryptocurrency events in history. The cryptocurrency behemoth fell to the ground in a span of a few days as the internal play of the exchange began slowly unfolding.
The event was truly an awakening moment for regulators around the world, as they wanted to implement a framework that eliminated the possibility of another FTX-like event.