US Regulator Requests Banks Report Crypto Activity

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The U.S. Fed­er­al Deposit Insur­ance Cor­po­ra­tion (FDIC) has request­ed that banks under its juris­dic­tion noti­fy it of any cryp­to-relat­ed activ­i­ties they are engaged in or intend to be engaged in. 

In a let­ter pub­lished on its web­site, the fed­er­al reg­u­la­tor asked that banks pro­vide any infor­ma­tion, “that will allow the agency to assess the safe­ty and sound­ness, con­sumer pro­tec­tion, and finan­cial sta­bil­i­ty impli­ca­tions of such activities.” 

In addi­tion to pro­vid­ing details on the planned activ­i­ty, the FDIC also request­ed a pro­posed time­line for such activ­i­ties. The FDIC said it would review the infor­ma­tion upon receiv­ing it and pro­vide appro­pri­ate super­vi­so­ry feedback.

In the let­ter, the FDIC claimed to be sup­port­ive of inno­va­tions, con­di­tion­al on their safe­ty, com­pli­ance with reg­u­la­tions, and fair­ness to consumers. 

How­ev­er, the reg­u­la­tor expressed con­cern over cryp­to assets, as there has been lim­it­ed expe­ri­ence with them, giv­en the speed at which they have devel­oped, to com­pre­hen­sive­ly under­stand their risks.

Accord­ing­ly, the FDIC said that “insured depos­i­to­ry insti­tu­tions face risks in effec­tive­ly man­ag­ing the appli­ca­tion of con­sumer pro­tec­tion laws and reg­u­la­tions to new and chang­ing cryp­to-relat­ed activities.” 

Addi­tion­al­ly, it believes that cryp­to-relat­ed activ­i­ties also present sig­nif­i­cant safe­ty risks to con­sumers and could ulti­mate­ly threat­en finan­cial stability. 

The FDIC warned that con­fu­sion sur­round­ing cryp­to-assets on the part of con­sumers could lead to dis­rup­tions, such as a “run” on a firm’s finan­cial assets.

Crypto risk a priority

In Feb, the FDIC list­ed eval­u­at­ing cryp­to-asset risks as one of its top pri­or­i­ties for the year. 

In its eval­u­a­tion, the reg­u­la­tor had ear­li­er stat­ed that the rapid inte­gra­tion of dig­i­tal assets into the finan­cial sys­tem as it cur­rent­ly exists could pose sig­nif­i­cant risks to its fun­da­men­tal secu­ri­ty. It added that banks should care­ful­ly con­sid­er the risks posed by these prod­ucts before engag­ing in cryp­to-asset-relat­ed activities. 

“To the extent such activ­i­ties can be con­duct­ed in a safe and sound man­ner, the agen­cies will need to pro­vide robust guid­ance to the bank­ing indus­try on the man­age­ment of pru­den­tial and con­sumer pro­tec­tion risks raised by cryp­to-asset activ­i­ties,” the state­ment read.

Disclaimer

All the infor­ma­tion con­tained on our web­site is pub­lished in good faith and for gen­er­al infor­ma­tion pur­pos­es only. Any action the read­er takes upon the infor­ma­tion found on our web­site is strict­ly at their own risk.

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