Agencies Address Crypto-Assets

The Federal Reserve, FDIC and OCC (the Agencies) recently issued a statement outlining work they’ve done related to crypto-assets and what they’re planning for the future (i.e., a “crypto-asset roadmap”).

Specifically, the Agencies have begun to look at the different types of crypto-asset activities institutions may get involved with, such as crypto-asset custody; facilitating the purchase and sale of crypto-assets; using crypto-assets as collateral; payment activity; and holding crypto-assets on a balance sheet.  Their work up to this point has focused on:

  • Developing a common and consistent vocabulary that can be used and understood in the industry;
  • Identifying and assessing key safety and soundness, consumer protection, and compliance risks;
  • Conducting crypto-asset activities from a legal perspective;
  • Applying existing regulations and guidance; and,
  • Identifying areas that could use additional clarity.

The Agencies refer to the above as “sprint work”.  In 2022, the Agencies plan to clarify permissible crypto-asset activities, as well as safety and soundness, consumer protection and compliance expectations.  In addition, the Agencies will watch for new developments and look at how capital and liquidity standards should apply in relation to crypto-assets.

OCC Interpretive Letter

The OCC also issued an Interpretive Letter to clarify previous interpretations on cryptocurrency activity.  If done consistently with safe and sound banking practices, prior letters had clarified that banks may:

  • provide certain cryptocurrency custody services…;
  • hold deposits that serve as reserves for stablecoins that are backed on a 1:1 basis by a single fiat currency and held in hosted wallets; and,
  • …use distributed ledgers and stablecoins to engage in and facilitate payment activities.

This letter, however, explains how banks can demonstrate activities are being done in a safe and sound manner.  Banks should document and be able to demonstrate an understanding of the specific risks (operational, liquidity, strategic, compliance, etc.) and compliance requirements.  Before beginning any of these activities, banks should notify their supervisory office in writing and receive written notice of the OCC’s “non-objection”.  The OCC does also note the conditions, processes and controls outlined in prior letters still apply.


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