During a speech yesterday, Michael Hsu, Acting Comptroller of the Currency, compared the FTX cryptocurrency exchange’s collapse to the BCCI Bank failure in 1991. BCCI’s demise triggered changes in banking regulations, not least the need for a bank’s home regulator to have visibility over its entire operations.
BCCI was known for its global reach, with operations in 72 countries.
Comparing FTX and BCCI, Hsu observed, “Both lacked a lead or ‘home’ regulator with authority and responsibility for developing a consolidated and holistic view of the firms. Both operated across jurisdictions where there was no established framework for regulators to share information on the firms’ operations and risk controls. Both used multiple auditors to ensure that no one could have a holistic view of their firms.”
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