Congress need not intervene to regulate tokenization, says Acting Comptroller Hsu

Acting Comptroller of the Currency Michael Hsu said that congressional intervention is unnecessary for regulating tokenized deposits.

"In the tokenized deposit space… I think we can use all the existing rules and frameworks we have now," Hsu said during a panel at the 8th Annual Washington DC Fintech Week on Oct. 22. "We just need to focus on them, and we need to basically get in the lab, get our hands dirty, and innovate with it." 

The OCC, which is part of the U.S. Treasury Department and is tasked with regulating and supervising national banks and federal savings associations, has been focused on  the "tokenization of real-world assets and liabilities." 

"In contrast to crypto, tokenization is driven by solving real-world settlement problems and can be developed in a safe, sound, fair, and compliant manner," Hsu said in congressional testimony in May. 

Hsu has been critical of crypto, and last year said the crypto industry is mostly retail-focused, Hsu said, and "remains replete with fraud, scams and hacks."

Blockchain ≠ crypto

Blockchain and crypto are not the same, Hsu also said last week. 

"For the nerds in the house, which I count myself as one of them," Hsu said. "It's good to be precise and with tokenization — it is not synonymous with crypto blockchain."

Assets can be tokenized without using blockchain, Hsu added.

However, Hsu said blockchain has helped bring more innovation in the traditional financial sector.

"One of the benefits of all these developments in the blockchain space — it has prompted more innovation in what I would call the traditional funding space in a good way," Hsu said. "It really has forced a lot more thinking about what needs to be done essentially to keep up, but to provide these benefits using existing infrastructure for trust."