The Federal Deposit Insurance Corporation, The United States government corporation that insures depositors in commercial and savings banks issued a letter to financial institutions on Thursday.. The letter requests institutions supervised by the agency to notify the appropriate regional director of their activities with cryptocurrency-related assets or their intentions to engage in cryptocurrency-related activities.
According to the letter, “It is difficult for institutions, as well as the FDIC, to properly assess the safety and soundness, financial stability, and consumer protection implications without considering each cryptocurrency-related activity individually.”
Consequently, the FDIC wants to receive all the information necessary to “engage with the institution regarding related risks” arising from your current or anticipated activity related to cryptocurrencies and “provide relevant supervisory information to the FDIC-supervised institution, as appropriate, in a timely manner.” Institutions are encouraged to contact state regulators simultaneously.
The note advises that institutions “They must be able to demonstrate their ability to carry out cryptocurrency-related activities in a safe and sound manner.” Descriptions of the risk considerations facing institutions, broken down into categories of safety and soundness, financial stability, and consumer protection, make up the bulk of the letter.
The FDIC partnered with the Office of the Comptroller of the Currency on a “policy sprint” focused on crypto assets last year, and in November, released a statement on its results, where the agencies outlined a “plan to provide greater clarity on whether certain crypto-asset-related activities carried out by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with laws and regulations existing”.
In February, the New Jersey representative Josh Gottheimer published a draft of his Stablecoin Protection and Innovation Act of 2022. If passed, the legislation would designate stablecoins issued by insured depository institutions or certain non-bank issuers as “qualified” and would require the FDIC to establish a Qualified Stablecoin Insurance Fund.
United States President Joe Biden’s Executive Order to ensure the responsible development of digital assets listed the FDIC Chairman among the officials who are “encouraged to consider the extent to which investor protection measures and market within their respective jurisdictions may be used to address digital asset risks and whether additional measures may be necessary.”
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