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One of the United States’ regulators for the banking sector is now imposing a new requirement for financial institutions engaged in crypto activities. The Federal Deposit Insurance Corporation (FDIC) is now requiring the thousands of banks it supervises to report any crypto-related activities they are currently engaged in or are planning to offer to their clientele.
The regulator sent a letter to the CEOs of FDIC-insured financial institutions on Thursday requesting them to notify their regional FDIC of both current and planned crypto-related activities. The FDIC cited potential systemic risks from crypto-assets and activities as the reason for this new reporting requirement.
“An FDIC–supervised institution that engages, or intends to engage in, any crypto-related activities should notify the FDIC and provide any information requested by the FDIC that will allow the agency to assess the safety and soundness, consumer protection, and financial stability implications of such activities,” the regulator said.
The regulator explained that it is not against innovative technologies but expressed its concerns over the potential financial stability as well as safety and soundness risks crypto-related activities could bring. FDIC also pointed out that such activities could also pose risks to consumers and insured depository institutions.
“While the FDIC supports innovations that are safe and sound, in compliance with laws and regulations, and fair to consumers, the FDIC is concerned that crypto assets and crypto-related activities are rapidly evolving, and risks of this area are not well understood given the limited experience with these new activities,” the regulator added.
The letter suggests that the FDIC is now getting serious when it comes to regulating crypto activities in the banking sector. The move comes one month after U.S. President Joe Biden signed an executive order directing federal agencies to coordinate their efforts at drafting crypto regulations and mirrors the administration's concerns over the new asset class.
“The rise in digital assets creates an opportunity to reinforce American leadership in the global financial system and at the technological frontier, but also has substantial implications for consumer protection, financial stability, national security, and climate risk,” a White House fact sheet on the executive order on crypto said.
