{"id":1492493,"date":"2022-05-26T07:29:53","date_gmt":"2022-05-26T11:29:53","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1492493"},"modified":"2022-05-26T07:29:58","modified_gmt":"2022-05-26T11:29:58","slug":"top-bank-regulator-warns-against-investing-in-crypto-for-investors-with-modest-means","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/top-bank-regulator-warns-against-investing-in-crypto-for-investors-with-modest-means\/","title":{"rendered":"Top Bank Regulator Warns Against Investing in Crypto for Investors With Modest Means"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">26<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ftop-bank-regulator-warns-against-investing-in-crypto-for-investors-with-modest-means%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1492493&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Acting Comptroller of the Currency Michael Hsu said this week that hype is a serious risk for cryptocurrencies and likened certain crypto transactions to Ponzi schemes, warning that the crypto space is very dangerous for investors of modest means.<\/p>\n<p>The comments come after the collapse of stablecoin TerraUSD (<a href=\"https:\/\/finance.yahoo.com\/quote\/UST-USD\/\" data-ylk=\"slk:UST-USD\" class=\"link\">UST-USD<\/a>) on May 9 <a href=\"https:\/\/finance.yahoo.com\/news\/crypto-luna-ust-stablecoin-171635226.html\" data-ylk=\"slk:reverberated through the cryptocurrency market;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">reverberated through the cryptocurrency market<\/a>.<\/p>\n<p>\u201cThe recent collapse of the TerraUSD stablecoin and associated sell-off in crypto markets has shown that hype-driven growth can lead to bubbles, harm consumers, and crowd out productive innovation,\u201d Hsu said in a speech Tuesday before the Digital Chamber of Commerce.<\/p>\n<p>\u201cWhat has become clearer to me \u2026 is that these developments are indicative of the crypto economy\u2019s dependence on hype\u2026the recent events in crypto should serve as a wake-up call and an opportunity to reset and to recalibrate the problems the industry is trying to solve,\u201d he added.<\/p>\n<p>Hsu says that contagion risks within crypto are real, underscoring that the collapse of algorithmic stablecoin Terra spread to the largest stablecoin, Tether (<a href=\"https:\/\/finance.yahoo.com\/quote\/USDT-USD\/\" data-ylk=\"slk:USDT-USD)\" class=\"link\">USDT-USD)<\/a>, and to the broader crypto ecosystem.<\/p>\n<p>Still, Hsu was encouraged that the cryptocurrency rout didn&#8217;t seem to hurt traditional banks. He said the OCC\u2019s <a href=\"https:\/\/finance.yahoo.com\/news\/treasury-official-regulate-stablecoin-issuers-195007174.html\" data-ylk=\"slk:work to require banks to ask permission;outcm:mb_qualified_link;_E:mb_qualified_link;ct:story;\" class=\"link  yahoo-link\">work to require banks to ask permission<\/a> to engage in crypto activities has helped limit exposure.<\/p>\n<p>\u201cNo banks are under stress or even rumored to be under stress due to crypto exposure,\u201d Hsu said.<\/p>\n<figure class=\"caas-figure\">\n<div class=\"caas-figure-with-pb\">\n<div>\n<div class=\"caas-img-container caas-img-loader\"><noscript><img decoding=\"async\" alt=\"WASHINGTON, DC - AUGUST 03:  Acting Comptroller of the Currency Michael Hsu testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee at Dirksen Senate Office Building August 3, 2021 on Capitol Hill in Washington, DC. The committee held a hearing on \u201cOversight of Regulators: Does our Financial System Work for Everyone?\u201d (Photo by Alex Wong\/Getty Images)\" src=\"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2022\/05\/26072956\/52b55e70-b774-11ec-a3fb-c65657d8f43b\" class=\"caas-img\" \/><\/noscript><\/div>\n<\/div>\n<\/div>\n<p><figcaption class=\"caption-collapse\">WASHINGTON, DC &#8211; AUGUST 03: Acting Comptroller of the Currency Michael Hsu testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee at Dirksen Senate Office Building August 3, 2021 on Capitol Hill in Washington, DC. The committee held a hearing on \u201cOversight of Regulators: Does our Financial System Work for Everyone?\u201d (Photo by Alex Wong\/Getty Images)<\/figcaption><\/p>\n<\/figure>\n<p>The self-described crypto skeptic also warned that crypto is highly fragmented. He noted that the daily addition of new blockchains creates the need for cross-chain bridges \u2014 systems that enable the transfer of cryptocurrencies between blockchains \u2014 that expose the system to hacks.<\/p>\n<p>\u201cIt is as if instead of converging on a single standard railway gauge to connect the country, innovators are incentivized to build customized railcar systems from scratch,\u201d he said.<\/p>\n<p>Hsu also says there is not enough clarity about how custody works and who owns crypto assets bought from an exchange. \u201cEstablishing clear standards for the ownership and custody of digital assets would protect consumers while enabling sustainable, long-term growth,\u201d he said.<\/p>\n<p>The acting comptroller is also worried about crypto products that offer what he calls \u201cunsustainably high\u201d yields. Offering high yields is the top way to attract investors to crypto, he noted, especially in the decentralized finance space. In particular, Hsu likens yield farming \u2014 essentially lending out one\u2019s crypto using smart contracts in return for yield \u2014 to a Ponzi scheme.<\/p>\n<p>\u201cThere seems to be growing acknowledgement that yield farming today may have more in common with Ponzi schemes than with productive innovation,\u201d he said.<\/p>\n<p>Cowen analyst Jaret Seiberg says he thinks Hsu\u2019s comments infer that banks will have a challenging time participating in crypto. \u201cHsu is arguing that current crypto valuations cannot be trusted,\u201d Seiberg said. \u201cThat means the best way to protect the banking system is to limit its exposure to crypto.\u201d<\/p>\n<p>Seiberg also says it\u2019s hard to see the OCC issuing limited-purpose charters for financial entities to participate in crypto given that Hsu wants to protect the banking system from crypto risks.<\/p>\n<p><em>Jennifer Schonberger covers cryptocurrencies and policy for Yahoo Finance. Follow her at <\/em><a href=\"https:\/\/twitter.com\/Jenniferisms\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:@Jenniferisms\" class=\"link\"><em>@Jenniferisms<\/em><\/a><em>.<\/em><\/p>\n<p><strong><em>Follow Yahoo Finance on <\/em><\/strong><a href=\"https:\/\/twitter.com\/YahooFinance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Twitter\" class=\"link\"><strong><em>Twitter<\/em><\/strong><\/a><strong><em>, <\/em><\/strong><a href=\"https:\/\/www.facebook.com\/yahoofinance\/\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Facebook\" class=\"link\"><strong><em>Facebook<\/em><\/strong><\/a><strong><em>, <\/em><\/strong><a href=\"https:\/\/www.instagram.com\/yahoofinance\/?hl=en\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Instagram\" class=\"link\"><strong><em>Instagram<\/em><\/strong><\/a><strong><em>, <\/em><\/strong><a href=\"https:\/\/flipboard.com\/topic\/yahoofinance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:Flipboard\" class=\"link\"><strong><em>Flipboard<\/em><\/strong><\/a><strong><em>, <\/em><\/strong><a href=\"https:\/\/www.linkedin.com\/company\/yahoo-finance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:LinkedIn\" class=\"link\"><strong><em>LinkedIn<\/em><\/strong><\/a><strong><em>, and<\/em><\/strong><a href=\"http:\/\/youtube.com\/c\/yahoofinance?sub_confirmation=1\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:\u00a0\" class=\"link\"><strong><em>\u00a0<\/em><\/strong><\/a><a href=\"http:\/\/youtube.com\/c\/yahoofinance?sub_confirmation=1https:\/\/www.youtube.com\/c\/yahoofinance\" rel=\"nofollow noopener\" target=\"_blank\" data-ylk=\"slk:YouTube\" class=\"link\"><strong><em>YouTube<\/em><\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Acting Comptroller of the Currency Michael Hsu said this week that hype is a serious risk for cryptocurrencies and likened certain crypto transactions to Ponzi schemes, warning that the crypto<\/p>\n","protected":false},"author":489,"featured_media":2315279,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1492493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1492493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/489"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1492493"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1492493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1492493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1492493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1492493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}