In his announcement of a symposium scheduled for 2024, Michael Hsu, the current Acting Comptroller of the Currency, expressed favorable views on tokenization. Hsu, who has been skeptical about cryptocurrencies and had previously slowed down certain relaxations of stablecoin regulations for banks, noted a growing distinction between crypto and the tokenization of real-world assets and liabilities.
According to Hsu, cryptocurrency is predominantly driven by the allure of speculative profits, plagued by widespread scams, fraud, security breaches, and struggles to adhere to anti-money laundering regulations. In contrast, tokenization is primarily motivated by the goal of addressing real-world settlement issues and can be developed in a secure and compliant manner, fully aligning with anti-money laundering rules. Hsu eagerly anticipates an in-depth discussion on these topics with experts in the field.
In a separate development reported in June, it was suggested that the Comptroller had granted approval for JP Morgan to participate in the Partior cross-border payments network. However, Hsu remains critical of permissionless public blockchains, expressing the belief that trusted blockchains are better suited to enabling growth on a large scale. Nevertheless, he acknowledges that future innovations may reveal non-blockchain-based systems as more suitable for certain tasks.
The BIS Unified Ledger concept, which advocates for tokenization, aims to integrate tokenized digital assets, tokenized bank money, and central bank digital currencies (CBDCs) within a shared infrastructure. Notably, a BIS paper from June discussing this concept did not mention blockchain or distributed ledger technology (DLT) in its glossary. The upcoming symposium will feature Hyun Song Shin, the Head of Research at the BIS and one of the authors of the Unified Ledger report.