The Federal Deposit Insurance Corporation (FDIC) has issued a letter to all FDIC-supervised institutions that intend to engage in, or that are already engaged in, any activities involving or related to crypto-assets. The letter instructs all institutions to notify FDIC of current or anticipated crypto-asset related activities.
The FDIC’s intention is to review all the information and provide relevant supervisory feedback which, while supporting innovation, will be designed to ensure that FDIC-supervised institutions are in compliance with laws and regulation and acting in a manner that is fair to consumers.
The primary concern is, with the rapidly evolving nature of crypto-related activities and limited experience most institutions have with these activities, risks are not fully or well understood. Therefore, the FDIC is proposing the use of part 364 under Section 39 of the Federal Deposit Insurance Act to set safety and soundness standards for all FDIC-supervised institutions.
The FDIC also expressed concerns crypto-related activities may pose a significant risk to financial stability, as well as posing risk to consumers as institutions face uncertainty while managing the application of consumer protection laws and regulations that are new and evolving around crypto technology.
One key piece of information the FDIC will be looking for is if an institution is able to demonstrate their ability to conduct crypto-related activities in a safe-and-sound manner. How exactly “a safe-and-sound manner” is to be defined regarding to crypto-related activities remains to be seen.