The US Federal Reserve on Tuesday issued additional guidance for banks considering activities involving cryptocurrencies, requiring firms to notify the Fed in advance and ensure everything they do is legally permitted.
The Fed said in a statement that while cryptocurrencies could present “potential opportunities” to banks, firms must ensure they have systems in place in advance to ensure volatile assets do not pose a risk to safety and soundness or consumer protection.
Banks must notify the Fed before engaging in any crypto-related activities, and banks that have already pursued crypto activities must also notify the Fed of their involvement in the digital asset space, the agency said.
The Fed encouraged state member banks to alert their state regulators before getting involved in crypto activities.
The Fed said in the supervisory letter that banks supervised by the agency must take several steps before engaging in any crypto-related activities, including determining whether any specific filings are required by existing laws and whether any activity in question is legally permissible.
Before getting involved in crypto, banks must have adequate risk management systems and controls in place to ensure any ventures are conducted in a safe and sound manner and comply with relevant consumer protection conditions, the Fed said.
The move comes days after several Democratic senators, led by Massachusetts Sen. Elizabeth Warren called on the US Office of the Comptroller of the Currency (OCC) to rescind previously issued guidance on crypto and replace it with a “comprehensive approach in coordination with other prudential regulators.”
Last year, US banking regulators, including the Fed and the OCC, jointly said they intend to clarify the types of activities banks can involve in crypto in 2022, including whether companies can hold digital assets on their balance sheets and facilitate crypto trading on them. On behalf of customers.
© Thomson Reuters 2022
