Federal bank regulatory agencies — including the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency — issued a statement on Nov. 23 which summarized their interagency “policy sprints” focused on crypto-assets, as well as provided a roadmap of future work related to crypto-assets.
By Yaёl Bizouati-Kennedy
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The agencies said that as supervised institutions participate in crypto-asset-related activities, it is important that they “provide coordinated and 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,” according to the announcement. To that end, the agencies recently conducted a series of interagency “policy sprints” focused on crypto-assets.
The focus of the work was around building understandable crypto terminology, identifying key risks related to crypto-asset activities and analysis of current regulations in regard to how they can be further clarified. To place the sprint work in context, they reviewed several crypto-asset activities in which banking organizations may be interested in engaging. These activities include crypto-asset custody; facilitation of customer purchases and sales of crypto-assets; loans collateralized by crypto-assets; and activities involving payments, including stablecoins.
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“All countries are exposed to inflation and deflation,” Regev continued. “Some countries allow the market to lead while other countries prefer to apply their own policy.”
The agencies said they have developed a crypto-asset roadmap for 2022, which plans to provide greater clarity on whether banking organizations’ crypto-assets-related activities are legally permissible, and expectations for safety and soundness, consumer protection, and compliance regarding existing rules and regulations. Areas of focus will will include crypto-asset safekeeping and traditional custody services, custody services, facilitation of customer purchases and sales of crypto-assets, loans collateralized by crypto-assets, issuance and distribution of stablecoins, and activities involving the holding of crypto-assets on balance sheet. They added that they will also evaluate the application of bank capital and liquidity standards to crypto assets for activities involving U.S. banking organizations.
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“For example, it is reasonable to assume that with the acceptance of digital currencies, the conversion rate and the trading volume between digital assets may increase, as well, White added. “This gives the public easy access for such trading and they may panic during catastrophic events (or a bear market) and pay over price to avoid losses and move into a stable currency, or the other way around when attempting investment opportunities such as bitcoin are available during a bull market. Such volatility may be disruptive to monetary policy.”
