An interagency team of banking regulators in the United States made up of the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve and the Office of the Comptroller of the Currency, are joining forces to develop a regulatory roadmap for banks to incorporate cryptocurrencies in their service offerings.
Clearer rules on holding criptomonedas to facilitate the trading of customers, using them as collateral for loans and keeping in balance sheets as assets, are among the issues being addressed by regulators.
However, the volatility of cryptocurrencies makes it difficult to determine how to use them as collateral and include them on bank balance sheets. The director of the FDIC , Jelena McWilliams notes that the management and mitigation of risks are key if the banks will operate in this space.
Some banks have already started to dabble, like JPMorgan and Goldman Sachs , amid regulatory turmoil.
The FDIC’s Position Regarding Cryptocurrencies
The FDIC recognized that there are novel and unique considerations related to digital assets in May 2021.
It began collecting stakeholder feedback and information to better understand industry and consumer interests in digital assets, following the initial interest and involvement of banks in the crypto ecosystem.
Ms McWilliams said in a conversation with marketplace.org in 2019 that an entire core banking system could be affected by cryptocurrencies.
He expressed his desire to cross two extremes; He didn’t want the FDIC to give the green light to something they weren’t sure of, nor did he want to discourage innovation.
Will the FDIC insure cryptocurrency deposits?
When a bank fails in the United States it is the responsibility of the FDIC to pay off bank loans and other assets.
The FDIC recently partnered with crypto custody firm Anchorage to help it liquidate a bank’s crypto assets. Anchorage will help you store and sell Bitcoin and other digital assets if a bank fails.
It is not yet clear whether the FDIC will contemplate investor protection mechanisms for people who invest with Coinbase or Gemini.
Again, the volatility of cryptocurrencies complicates insurance coverage. Coinbase has had insurance with Lloyd’s of London since 2013, to protect more than $ 255 million in assets, and has one of the strongest cybersecurity systems among crypto exchanges globally.