- Banks that are engaged in or planning to pursue cryptocurrency-related activities should notify the Federal Deposit Insurance Corp. (FDIC), the regulator said in a letter Thursday.
- Any institutions involved in crypto-related activities should "promptly" notify the appropriate FDIC regional director, the agency said, adding the regulator will request information regarding the activity on a case-specific basis.
- The FDIC’s request for notification of crypto activity is similar to statements released by the Office of the Comptroller of the Currency (OCC) in November, following that regulator’s review of several crypto-related interpretive letters.
The FDIC said it supports safe and sound innovations but is concerned that the risks associated with crypto assets and crypto-related activities are not well understood.
"As a result of the dynamic nature of crypto-related activities, 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 agency said.
The FDIC cited ownership issues, anti-money laundering, IT security and credit risk as areas of concern regarding banks’ engagement with digital assets.
Involvement in crypto-related activities also represents risks to financial stability and consumer protection, the regulator said.
"Systemic risks could be created as an unintended consequence resulting from the structure of a crypto asset or through the interconnected nature of certain crypto-related activities," the FDIC said.
The regulator warned a disruption in crypto-asset transactions or crypto-related activities "could result in a 'run' on financial assets backing a crypto asset or crypto-related activity."
The regulator also noted the potential for "consumer confusion," as consumers "may not understand the role of the bank or the speculative nature of certain crypto assets as compared to traditional banking products."
The FDIC joins the OCC in its request that it be kept in the loop regarding financial firms’ digital-asset activity.
The OCC in November clarified that the activities addressed in a series of crypto-related interpretive letters issued under former Acting Comptroller Brian Brooks may be conducted after a bank receives a green light from its supervisory office.
"The bank should not engage in the activity until it receives a non-objection from its supervisory office," the OCC said in a statement.