U.S. Regulator Simplified Banks’ Crypto Activities

The Federal Deposit Insurance Corporation (FDIC) removed the requirement for banks and financial institutions to notify the regulator in advance about planned crypto-related activities.

FDIC representatives repealed the requirement (FIL-16-2022) that mandated banks to inform the regulator before engaging in crypto-related operations. Instead, a new guideline was issued, allowing banks to conduct permissible digital asset activities and participate in crypto initiatives, including the adoption of emerging technologies, without prior notification to the FDIC.

The regulator emphasizes that any crypto-related activity must comply with safety and security requirements, as well as existing laws and regulations. Banks must consider a broad range of risks, including market, liquidity, operational, and cybersecurity risks, while ensuring consumer protection and adherence to anti-money laundering policies.

The FDIC will continue collaborating with the President’s Working Group on Financial Markets and other banking regulators. Additional guidance is expected soon, along with new regulatory frameworks that will replace interagency documents published in January and February 2023, further defining banks’ engagement with cryptocurrencies.

In recent months, there was a surge in interest from cryptocurrency and FinTech firms in obtaining banking licenses at both state and federal levels, allowing them to operate as regulated financial institutions.