FDIC Says Banks Can Engage In Bitcoin And Crypto Without Prior Approval
The Federal Deposit Insurance Corporation (FDIC) has recently announced a significant policy change regarding banks’ involvement in bitcoin and cryptocurrency activities. This new guidance, issued on March 28, allows banks under its supervision to engage in crypto-related services such as custody and trading without the need for pre-approval. This marks a departure from the previous administration’s stringent regulations on crypto assets.
The FDIC emphasized that banks must effectively manage the risks associated with cryptocurrency activities to participate in them. The agency also stated its intention to update outdated regulations with new guidance specifically tailored to the evolving crypto landscape.
The updated policy, outlined in a Financial Institution Letter, revokes the previous requirement for banks to seek FDIC clearance before dealing with bitcoin and other crypto assets. This bureaucratic hurdle had hindered the banking industry’s ability to explore opportunities in the crypto space.
By eliminating this barrier, the FDIC empowers its supervised banks to more freely explore the possibilities within the crypto ecosystem. However, the specific permissions granted to banks will still be contingent on coordination with other regulatory agencies.
Acting FDIC Chairman, Travis Hill, described the policy change as a crucial step towards establishing a more crypto-friendly regulatory framework focused on security. He expressed the agency’s commitment to moving away from the restrictive approach of the past few years and indicated that additional guidance would be forthcoming as the FDIC collaborates with the President’s Working Group on digital assets.
Despite the regulatory ambiguity surrounding cryptocurrency, several major banks have already ventured into offering bitcoin and crypto services. The FDIC’s clarification on regulations is expected to encourage more banks to enter the crypto market, providing much-needed regulatory clarity for the industry.
Overall, the FDIC’s decision to streamline the process for banks engaging in crypto activities reflects a more progressive stance towards digital assets. This move not only benefits banks but also contributes to the broader adoption and acceptance of cryptocurrencies in the financial sector.
