U.S. Banking Watchdog OCC Makes Case for Tokenization, Just Not on Public Blockchains
OCC Chief Michael Hsu, an outspoken critic of crypto currencies, cited asset tokenization as the future, but noted centralized efforts would likely prevail in the long run.
Michael Hsu, acting head of the U.S. Office of the Comptroller of the Currency (OCC), recently noted that tokenization of assets represents an exciting development in finance; however, decentralized blockchains may prove too challenging to sustain this movement.
Hsu announced at an American Bankers Association event on Friday that reaching decentralization, security and scale simultaneously is “not possible with a public blockchain.”
“As a result, the crypto industry remains mostly self-referential and detached from real life,” according to Mr. Lee. Furthermore, this sector remains immature and rife with risks despite years of mainstream coverage, billions in venture capital investments, and millions of hours dedicated to code commits.
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As stated by U.S. banking regulators such as the OCC, involvement in crypto requires precise scrutiny from institutions they regulate; yet some financial firms – including Wall Street banks – have experimented with managing their own blockchain projects. Hsu believes centrally-run and trusted blockchains offer greater potential to deliver security while scaling efficiently while tokenization does not necessitate decentralization or trustlessness.
“Tokenization promises to streamline instruction, transaction and settlement into one step – provided the technology can interoperate with central bank money and real-world settlement systems”, explained Gellert. To fully realize tokenization’s potential however, legal foundations for its implementation need to be set.
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Edited by Sheldon Reback. Subscribe to StateofCrypto, our weekly newsletter covering cryptocurrency and government issues.
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