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Financial Services Law Insights and Observations

OCC’s Hsu discusses priorities for safeguarding trust in banking

Federal Issues OCC Cryptocurrency Fintech Agency Rule-Making & Guidance

Federal Issues

On September 15, acting Comptroller of the Currency Michael J. Hsu spoke before the Exchequer Club to discuss several agency priorities relating to reducing inequality, adapting to digitization, acting on climate change, and guarding against complacency. In prepared remarks, Hsu stressed the importance of safeguarding trust in banking. While he acknowledged the value of strong rules and regulations, Hsu cautioned that rules “are not adaptive to emerging risks” and “cannot perceive and respond to trends and developments that may erode or threaten trust.” He further emphasized that regulators must coordinate efforts to ensure stability and fairness, and pointed to the growth of cryptocurrency and decentralized finance as areas where it is imperative that regulators work together to ensure activities taking place within the banking system or those that are facilitated by banks are trustworthy. “Innovation is important, but safeguarding trust is paramount,” Hsu stressed. Additionally, Hsu noted that “coordination among all financial regulators will also be needed in the future to ensure a level playing field and limit regulatory arbitrage and to keep shadow banking at a safe distance from the regulated financial system. These goals cannot be achieved if the financial regulatory agencies, including state banking supervisors, do not work together. Public trust in bank regulators will rise or fall depending on our ability to do so.”

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