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FDIC Chair: U.S. regulators exploring how banks could hold crypto assets

ComplianceX | Jack J. Kelly | Oct 27, 2021

Jelena McWilliams FDIC Chair - FDIC Chair:  U.S. regulators exploring how banks could hold crypto assets

REUTERS/David Swanson

LAS VEGAS (Reuters) – A top U.S. bank regulator said U.S. officials are looking to provide a clearer path for banks and their clients that are looking to hold cryptocurrencies, in order to keep control over the fast-developing asset.

Jelena McWilliams, who chairs the Federal Deposit Insurance Corporation, told Reuters in an interview on Monday that a team of U.S. bank regulators is trying to provide a roadmap for banks to engage with crypto assets.  That could include clearer rules over holding cryptocurrency in custody to facilitate client trading, using them as collateral for loans, or even holding them on their balance sheets like more traditional assets.

“I think that we need to allow banks in this space, while appropriately managing and mitigating risk,” she said in an interview on the sidelines of a fintech conference.  “If we don’t bring this activity inside the banks, it is going to develop outside of the banks.… The federal regulators won’t be able to regulate it.” Jelena McWilliams, Chair, FDIC

McWilliams’ comments provide the fullest picture yet of what regulators are exploring as part of a cryptocurrency “sprint” team first announced https://www.reuters.com/technology/fed-occ-fdic-sprint-regulation-crypto-quarles-says-2021-05-25 in May. The goal of the team was to ensure cryptocurrency policy coordination among the three main U.S. bank regulators – FDIC, Federal Reserve and Office of the Comptroller of the Currency.

The rapid emergence of cryptocurrency has led to a murky regulatory picture in the United States.

See: 

U.S. Justice Department Sets Up National Cryptocurrency Enforcement Team

Top US regulator tells crypto exchanges they need to ‘come in and talk to us’

Hester Peirce: Lawless in Austin

United States: FDIC Proposes Roadmap For Fintechs To Become Insured Banks

As regulators circle above, how should the DeFi industry respond?

 

Under previous leadership, the OCC took an aggressive approach to bringing cryptocurrency into banks, including blessing https://www.reuters.com/article/us-usa-banks-cryptocurrency/u-s-banks-given-regulatory-green-light-to-safekeep-cryptocurrencies-idUSKCN24N2HI bank custody services for cryptocurrency, while other agencies were slower to act.

Those decisions are now under review, according to acting Comptroller Michael Hsu.

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