Three major US agencies–Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency– released a joint statement recently. It listed crypto activities that will be considered permissible for the banking organizations.
The US regulatory framework in the crypto front has long been fragmented. It was the very reason why SEC Commissioner Hester Peirce dismissed the idea for a new crypto regulator.
It is noteworthy that none of these watchdogs were a part of the “policy sprints” that have been conducted so far. The focus of the report included developing a common vocabulary for the banking sector in relation to crypto-assets. Additionally,
“Identifying and assessing key risks… and considering legal permissibility related to potential crypto-asset activities conducted by banking organizations.”
This covers several aspects that include but are not limited to loans collateralized by crypto-assets, stablecoins, and crypto holdings on the bank’s balance sheet.
Further, as part of the roadmap, more clarity in this area is expected throughout the coming year. The release also noted that relevant authorities, like the Basel Committee on Banking Supervision, will be consulted for the outcome.
New rules for JP Morgan, BoA and others?
In an earlier circular, the OCC had made it clear that entry into the crypto sector for US banks would not be easy.
Acting Comptroller Michael Hsu said in a statement,
“Because many of these technologies and products present novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to conduct them safely.”
This essentially means that banks require written permission from supervisors before diving into the crypto sector. However, more clarity is expected on this rule under the “policy sprints” initiative discussed earlier.
With that, the next month is also looking busy for Congress.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) November 22, 2021
Congress and crypto businesses
According to Ron Hammond, House Financial Services Committee will listen to testimonies by several crypto CEOs on December 8. And, crypto themes like stablecoins, DeFi, Bitcoin’s climate impact, its use cases, and volatility is believed to be on the agenda.
Meanwhile, the ongoing crypto debate among Congress Senators continues to heat up. Senator Sherrod Brown recently issued letters to crypto exchanges and stablecoin issuers to seek additional information on consumer protection.