FDIC Requests Financial Institutions To Table Current And Future Crypto Plans

The Federal Deposit Insurance Corporation (FDIC), the United States government arm that insures commercial banks, savings banks, and financial institutions, has requested all institutions under its jurisdiction to notify regional directors about their current and future crypto plans.

In an official letter, the corporate insurance arm requested commercial and saving banks and other financial institutions to report their current activities with crypto-related assets or intentions to indulge in crypto-related activities to appropriate FDIC region directors. The letter reads:

“It is difficult for institutions, as well as the FDIC, to adequately assess the safety and soundness, financial stability, and consumer protection implications without considering each crypto-related activity on an individual basis.”

The Federal arm wants to amass the necessary information that will enable it to engage with financial institutions regarding related risks based on their current or intended crypto-related activity. FDIC aims to provide relevant supervisory feedback to financial institutions appropriately and on time. In that context, financial institutions are encouraged to contact state regulators frequently.

The letter advises that financial institutions should showcase their ability to conduct crypto-related activities safely and soundly. Furthermore, the letter features concerns on the risk facing institutions, safety and soundness, financial stability, and consumer protections.

FDIC Partnered With OCC

In November 2021, the FDIC partnered with the Office of the Comptroller of the Currency to determine whether certain crypto activities conducted on banking organizations are legally permissible. The joint team also sought their safety and soundness, consumer protection, and compliance with existing laws and regulations.

In February 2022, Josh Gottheimer, the Democrat House Representative for New Jersey, tabled his Stablecoin Innovation and Protection Act of 2022. Upon success, the new legislation will designate stablecoin issued by insured depository institutions or non-banks as qualified, requiring the FDIC to establish a Qualified Stablecoin Insurance Fund.

Furthermore, U.S President Joe Biden recently issued an Executive Order on Ensuring Responsible Development of Digital Assets. The directive required the FDIC chairperson and other Federal officials to prepare measures, considering investor and market protection within their jurisdictions. These measures include potential risks associated with digital assets and crypto-related activities.