FDIC Seeks Input on Digital Asset Regulation

The Federal Deposit Insurance Corporation (FDIC) has launched an information-gathering exercise as it explores how to regulate the emerging digital assets sector within the banking industry.

The FDIC is seeking input from any interested parties about the “current and potential digital asset activities” of depositary institutions such as banks.

The corporation said it recognized that there were “novel and unique considerations” around digital assets such as cryptocurrencies.

In a statement this week, it said: “Given that banks are increasingly exploring the emerging digital asset ecosystem, the FDIC is issuing this request for information to help inform its understanding of the industry’s and consumers’ interests in this area.”

“At the FDIC, we are laying the foundation for the next chapter of banking by ensuring we have a regulatory framework that allows responsible innovation to flourish,” said FDIC chair Jelena McWilliams.

“Digital assets is one area in which we have seen rapid expansion and innovation in recent years. This [information request] gives us an opportunity to gain additional insight into the market, and what role banks might play in the future.”

The work comes at a time when the American Bankers Association has been calling for a review of how new banks focused on digital assets such as cryptocurrencies are operated and receive regulatory approvals.

The trade association has previously objected to the Office for the Comptroller of the Currency’s (OCC) approval of digital asset custodian Paxos for a banking charter. It argued that however, the information in Paxos’ application was “vague” and the descriptions it provided about its cryptocurrency and fiduciary activities were “not sufficient” for a trust charter.

Over the course of the past year, the OCC and other regulators have been working to adapt their approaches and rules to cater for the rapidly growing financial technology sector.

Earlier this month the Federal Reserve proposed new guidelines for granting access to its payments system, a core element the US’ banking infrastructure.

The OCC declared in July 2020 that banks should be permitted to handle cryptocurrencies such as bitcoin, and cleared banks to accept payments in digital currencies in January.