Policy & Regulation

U.S. banking regulators plan to provide clarity on banks’ role in crypto in 2022

  • In 2022 authorities will provide more clarity on the role of banks in crypto
  • The statement does not aim to change existing rules or regulations
  • Michael Hsu, acting head of the OCC also urged regulators to work together on cryptocurrencies

The U.S. banking regulators issued a statement Tuesday saying it will provide clarity in 2022 on what role traditional banks can legally play in the cryptocurrency market.

In 2022 authorities will provide more clarity on the role of banks in crypto

According to their joint statement, the regulators, consisting of the Office of the Comptroller of the Currency, the Federal Reserve, and the Federal Deposit Insurance Corporation, have identified several areas they believe need public clarification. They plan to issue further clarifications on this topic during 2022.

In 2022, the agencies intend to provide more clarity on whether certain activities by banks related to crypto-assets are legally permissible and what the expectations are for safety and soundness, consumer protection, and compliance with existing laws and regulations. The regulations may cover custody of crypto-assets and traditional custodial services, loans secured by crypto-assets, and activities that involve holding crypto-assets on the balance sheet, but the issuance and distribution of stablecoins, for example, will also be covered by the regulators.

The statement does not aim to change existing rules or regulations

The statement does not aim to change existing rules or regulations, but instead aims to focus on strengthening internal understanding and defining regulatory parameters for each agency related to crypto activities.  Earlier this year  Jelena McWilliams, the chairwoman of the Federal Deposit Insurance Corporation made it clear that  a team of U.S. banking regulators is trying to create a roadmap for banks that want to engage with cryptocurrencies. At the time, she said the easiest way would be to get regulators to create a roadmap for crypto asset custody. However, she added that figuring out how to allow these assets as collateral and include them on bank balance sheets is difficult

Michael Hsu, acting head of the Office of the Comptroller of the Currency (OCC), also urged regulators to work together on cryptocurrencies. He argued that regulators need to clarify where crypto activity fits into their regulatory mandate and how they will work with other regulators to protect consumers. To that end, federal banking regulators have developed a standardized and consistent set of terms for crypto activity, identified key risks, and analysed how existing policies and regulations apply to cryptocurrencies.

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