The Federal Reserve Department, the Federal Deposit Insurance Corporation (or FDC) and the Office of the Comptroller of the Currency (OCC) issued a general statement notifying of a plan to clarify the rules and regulations that determine how banks can use cryptocurrencies next year (via Bloomberg).
The agencies say they are focused in setting expectations for what banks can do when holding cryptocurrencies, allowing customers to hold crypto, issuing their own stablecoins (or digital assets linked to a fiat currency such as the US dollar) and taking the digital money as collateral for loans and keeping it on their balance sheet. According to the letter, the aim is to ensure consumer protection and ensure that banks act responsibly. The management bodies also said it was an attempt to ensure that the financial industry is not used to launder the unfortunate currency, something the Ministry of Finance focused on recently.
OCC has brought moves in this direction – on Tuesday, the controller has temporarily announced a letter on clarifying decisions that the Department has made throughout 2020 and early 2021. Now, the letter indicates that banks will have to seek permission from the regional management agencies before moving into some fields of electronic money.
Previously, the controller stated that banks were allowed to hold cryptocurrencies for customers, as well as the assets used to back the stablecoins. Banks have also been informed that they can use stablecoins and act as nodes in blockchain networks. While financial institutions can always carry out these activities, they will need to be able to demonstrate to management bodies that they can do so safely and are responsible.
These announcements come as some crypto firms have been fighting with management agencies over the legal classification of their products. Recently, Coinbase cancelled its lending program after a public consultation with the Security and Exchange Commission asked whether it was selling counted as securities (and would therefore be a worse legal assessment). The Treasury also proposes that large transfers of cryptocurrencies be reported to the internal Revenue Services and requires Congress to start regulating stablecoins.
Source: The Verge
