In a speech at the American Bankers Association conference on Thursday, OCC Acting Comptroller Michael Hsu said that several large banks are exploring offering their clients a Bitcoin (BTC) futures market in order to trade forward contracts and other derivatives.
Before banks go too far down this road, they should carefully consider the tail risks of trading cryptocurrency derivatives. Hsu warned that the pricing of cryptocurrencies is “limited or unreliable,” so the kind of models that lenders typically use to calculate risk could lead them to underestimate the situation they face.
Banks may end up not having enough capital to hedge, Hsu believes. Additionally, Hsu said it is working with other global regulators to find a consistent and careful approach for banks to get involved in cryptocurrencies.