The performing chief of the U.S. Workplace of the Comptroller of the Forex (OCC), Michael Hsu, mentioned he’s optimistic concerning the transformative potential of tokenization however continues to be cautious of the crypto as a result of excessive ranges of threat.
Hsu made the assertion throughout a chat on the DC Fintech Week in Washington on Nov. 7.
Whereas nearly all of his time was spent speaking about banking supervision, he additionally highlighted the advantages of tokenization in streamlining the settlement of funds and securities. Alternatively, he dismissed cryptocurrencies as a speculative asset class that is still a dangerous enterprise.
Tokenization is promising
Hsu believes that tokenization gives a ground-breaking resolution to a vital monetary problem that has plagued the human monetary system for millennia — settlement.
Hsu mentioned:
“Tokenization is targeted on fixing an precise downside, and that downside is settlement.”
Hsu defined that within the conventional monetary world, each asset switch includes a number of intermediaries and checks to confirm its validity earlier than it may be formally settled within the recipient’s arms.
These layers of verification processes typically include further prices that will finally be borne by the client, including a component of threat to the transaction. Moreover, these processes are sometimes mired in legacy methods and methodologies, including vital delays and dangers.
In line with Hsu:
“Tokenization holds the promise to break down that and to simplify it — if it’s carried out proper.”
He added that there’s an increasing number of curiosity in tokenization, and the OCC is internet hosting a symposium on tokenization in February additional to ascertain an excellent basis for the know-how’s utility.
Crypto is simply too dangerous
Nevertheless, the performing chief’s optimism about tokenization is accompanied by reservations concerning the broader cryptocurrency business.
Hsu highlighted the rising disconnect between tokenization and cryptocurrencies, characterizing the latter as primarily pushed by speculative beneficial properties. He added that:
“There appears to be an increasing number of of a divide between crypto on one hand and tokenization of real-world belongings on the opposite.”
The performing chief mentioned that cryptocurrencies deliver with all of them kinds of threat elements that establishments are hesitant to interact with. Hsu added that the business remains to be primarily fueled by hypothesis and the need to make cash.
Hsu additionally highlighted that KYC (Know Your Buyer) points don’t have an effect on tokenization, whereas its virtually unattainable to inform who owns a selected pockets on a blockchain. He additionally expressed skepticism concerning the illicit monetary exercise within the business, saying:
“It nonetheless stays replete with frauds, scams, and hacks.”
Hsu mentioned that applied sciences want to resolve real-world issues to achieve traction among the many populace, and crypto remains to be in search of the issue it could possibly resolve.
Hsu’s stance displays the regulatory challenges dealing with the cryptocurrency business, which has encountered points associated to investor safety, market manipulation, and the absence of clear regulatory frameworks.
Regardless of the improvements and potentials throughout the crypto house, the prevalence of fraudulent actions has remained a big concern for regulators and traders alike.
