The performing chief of the U.S. Workplace of the Comptroller of the Forex (OCC), Michael Hsu, stated he’s optimistic concerning the transformative potential of tokenization however continues to be cautious of the crypto because of excessive ranges of danger.
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 presents a ground-breaking answer to a important monetary problem that has plagued the human monetary system for millennia — settlement.
Hsu stated:
“Tokenization is targeted on fixing an precise drawback, and that drawback 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 fingers.
These layers of verification processes typically include further prices that will finally be borne by the shopper, including a component of danger to the transaction. Moreover, these processes are sometimes mired in legacy techniques and methodologies, including important delays and dangers.
In accordance with Hsu:
“Tokenization holds the promise to break down that and to simplify it — if it’s achieved proper.”
He added that there’s increasingly 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 trade.
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 increasingly of a divide between crypto on one hand and tokenization of real-world property on the opposite.”
The performing chief stated that cryptocurrencies deliver with all of them types of danger components that establishments are hesitant to interact with. Hsu added that the trade remains to be primarily fueled by hypothesis and the will to generate income.
Hsu additionally highlighted that KYC (Know Your Buyer) points don’t have an effect on tokenization, whereas its nearly unattainable to inform who owns a selected pockets on a blockchain. He additionally expressed skepticism concerning the illicit monetary exercise within the trade, saying:
“It nonetheless stays replete with frauds, scams, and hacks.”
Hsu stated that applied sciences want to resolve real-world issues to realize traction among the many populace, and crypto remains to be searching for the issue it may resolve.
Hsu’s stance displays the regulatory challenges going through the cryptocurrency trade, which has encountered points associated to investor safety, market manipulation, and the absence of clear regulatory frameworks.
Regardless of the improvements and potentials inside the crypto house, the prevalence of fraudulent actions has remained a big concern for regulators and buyers alike.
