Appearing OCC chief says tokenization holds immense promise, however crypto nonetheless dangerous

by Cryptospacey

The performing chief of the U.S. Workplace of the Comptroller of the Forex (OCC), Michael Hsu, stated he’s optimistic in regards to 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 the vast majority 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 stated:

“Tokenization is targeted on fixing an precise downside, and that downside is settlement.”

Hsu defined that within the conventional monetary world, each asset switch entails a number of intermediaries and checks to confirm its validity earlier than it may be formally settled within the recipient’s palms.

These layers of verification processes typically include further prices that will in the end be borne by the shopper, including a component of threat to the transaction. Moreover, these processes are sometimes mired in legacy programs and methodologies, including important delays and dangers.

In keeping with Hsu:

“Tokenization holds the promise to break down that and to simplify it — if it’s achieved 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 determine an excellent basis for the know-how’s utility.

Crypto is just 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 an increasing number of of a divide between crypto on one hand and tokenization of real-world belongings on the opposite.”

The performing chief stated that cryptocurrencies carry with all of them types of threat components that establishments are hesitant to have interaction with. Hsu added that the trade remains to be primarily fueled by hypothesis and the will to become profitable.

Hsu additionally highlighted that KYC (Know Your Buyer) points don’t have an effect on tokenization, whereas its virtually unimaginable 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 unravel real-world issues to realize traction among the many populace, and crypto remains to be on the lookout for the issue it might clear up.

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 area, the prevalence of fraudulent actions has remained a big concern for regulators and traders alike.

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