U.S. banking regulators are planning a joint effort next year to craft guidance for banks on what kind of crypto-asset services they can provide.
In a joint statement, the Federal Reserve, Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency (OCC) said Tuesday that after conducting a series of interagency “policy sprints” focused on crypto-assets, they had developed “a roadmap of future planned work.”
“Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible,” the release said.
They will also address “expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations” related to, among other things, facilitation of customer purchases and sales of crypto-assets, loans collateralized by crypto-assets, and the issuance and distribution of stablecoins.
“The emerging crypto-asset sector presents potential opportunities and risks to banking organizations, their customers, and the overall financial system,” the regulators said.
The statement follows a Nov. 1 report from the President’s Working Group on Financial Markets suggesting that legislation is “urgently needed” to address the potential financial risks of stablecoins.
“At present, a seeming legislative tug-of-war is occurring between U.S. government agencies in regulating the crypto space, with much of the force behind the Securities and Exchange Commission and the Commodity Futures Trading Commission,” Cointelegraph reported.
The OCC separately published a letter on Tuesday confirming that financial institutions “must demonstrate [to regulators] that they have adequate controls in place before they can engage in certain cryptocurrency, distributed ledger, and stablecoin activities.”
To secure regulatory approval, the letter said, a bank should “specifically address risks associated with cryptocurrency activities, including, but not limited to, operational risk (e.g., the risks related to new, evolving technologies, the risk of hacking, fraud, and theft, and third-party risk management), liquidity risk, strategic risk, and compliance risk.”
According to Yahoo Finance, “Few banks are engaging in crypto right now, but those that aren’t, and want to do so going forward, will have to earn the [OCC’s] seal of approval.”