U.S. banking regulators seek clarity on crypto rules in 2022

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The Federal Reserve, the Federal Deposit Insurance Corporation (or FDIC), and the Office of the Comptroller of the Currency (OCC) have issued a joint statement announcing a plan to clarify the rules and regulations regarding how banks can use crypto currencies over the next year (via Bloomberg).

Agencies say they are focusing on setting expectations about what banks can do when it comes to holding cryptocurrencies, allowing customers to get cryptocurrency, issue their own stablecoins (or cryptocurrencies whose value is tied to a fiat currency like the US dollar), and take the crypto as collateral for loans and keep it on their balance sheets. According to the letter, the aim is to ensure that consumers are protected and that banks act responsibly. Regulators also say this is an attempt to ensure that the financial industry is not used to launder ill-gotten currency, something the Treasury Department has recently focused on.

The OCC has already taken steps in this direction – on Tuesday the Acting Controller released a letter clarifying the decisions the office had made throughout 2020 and early 2021. Now, according to the letter, banks will have to request authorization from regional regulators before entering certain cryptographic fields.

Banks must now show they can handle crypto safely

Previously, the controller said banks were allowed to hold cryptocurrencies for customers as well as assets used to back up stablecoins. Banks have also been told they can use stablecoins and act as nodes on blockchain networks. While financial institutions will always be able to do these activities, they will need to be able to demonstrate to regulators that they can do so in a safe and responsible manner.

The announcements come as some crypto companies clash with regulators over the legal classifications their products fall under. Recently, Coinbase canceled its loan program after a public row with the Securities and Exchange Commission over whether what it was selling counted as securities (and therefore would come under stricter legal scrutiny). The Treasury also proposed that large cryptocurrency transfers be reported to the Internal Revenue Service and asked Congress to start regulating stablecoins.

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