Determining whether crypto assets are legal, safe, and provide consumers with adequate protection from fraud are three areas of concern federal banking regulators say they will examine in 2022.
The Federal Reserve Board, Federal Deposit Insurance Corp. (FDIC), and Office of the Comptroller of the Currency (OCC) issued a joint statement Tuesday regarding recent interagency “policy sprints” on crypto assets. The statement lays out key risks regulators have identified for financial institutions entering the crypto asset space on their own behalf, for their customers, and for financial markets as a whole.
Those risks include whether crypto assets pose a threat to a financial institution’s safety and soundness; its ability to comply with existing banking regulations; and the legal permissibility for financial institutions to engage in crypto asset activities.
The statement does not alter any existing rules or regulations, according to an accompanying OCC press release. Instead, it examines areas where crypto assets and regulated financial institutions can and do intersect. The regulators indicated they will consider providing “timely clarity where appropriate to promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules.”
The regulators said they will also examine whether existing regulations are applicable, and if there are areas that might benefit from additional clarification.
According to the joint statement, some of the areas of intersection between financial institutions and crypto assets include:
- Crypto asset custody;
- Facilitation of customer purchases and sales of crypto assets;
- Loans collateralized by crypto assets;
- Activities involving payments, including stablecoins tied to a fiat currency like the U.S. dollar or euro; and
- Activities that may result in the holding of crypto assets on a banking organization’s balance sheet.
In 2022, regulators said they would “provide greater clarity” for financial institutions on how they can safely manage crypto assets on behalf of customers, both in traditional and ancillary custody services; how they can facilitate the purchase of crypto assets by their customers; whether loans can be collateralized by crypto assets; issuance and distribution of stablecoins by financial institutions; and activities involving the holding of crypto assets on a financial institution’s balance sheet.
“The agencies also will evaluate the application of bank capital and liquidity standards to crypto assets for activities involving U.S. banking organizations and will continue to engage with the Basel Committee on Banking Supervision on its consultative process in this area,” the joint statement said. “The agencies continue to monitor developments in crypto assets and may address other issues as the market evolves. Further, the agencies will continue to engage and collaborate with other relevant authorities, as appropriate, on issues arising from activities involving crypto assets.”