The top US banking regulator said it was trying to provide clearer rules for US banks and their clients who want to hold cryptocurrencies to maintain control of a fast-growing market.
US banks will be able to join the cryptocurrency sector
Jelena McWilliams, who chairs the Federal Deposit Insurance Corporation, told Reuters on Monday that a team of US banking regulators is trying to provide banks with a roadmap on how to get involved in the cryptocurrency sector.
This will include clearer rules on keeping cryptocurrencies in custody to make it easier for clients to trade, use them as collateral for loans or even keep them on their balance sheets as with more traditional assets.
“I think we need to allow banks to enter this sector while managing and mitigating risks appropriately,” she said in an interview.
“If we do not allow banks to do so, it will develop outside the banks – Federal regulators will not be able to regulate it.”
McWilliams’ comments provide the most complete picture yet of what the team set up by regulators in May is researching. The team’s goal was to coordinate cryptocurrency policy between the three major US banking regulators – the FDIC, the Federal Reserve System (FED) and the Office of Currency Control (OCC).
Under previous leadership, the OCC took a more aggressive approach to introducing cryptocurrency into banks, including authorizing banking services for cryptocurrencies, while other agencies acted more slowly. According to Acting Comptroller Michael Hsu, these decisions are currently being reviewed.
Some banks have already started working in these areas without clear regulations. Earlier this month, US Bancorp (USB.N) announced that it was launching a cryptocurrency management service for institutional investment managers.
But comments from McWilliams suggest that regulators are still looking for ways to incorporate cryptocurrencies into traditional banking supervision.
“My goal in this interagency group is basically to give banks a way to act as managers of these assets, to use crypto assets, digital assets as some form of collateral,” McWilliams said.
“At some point, we will also look at how and under what circumstances banks can keep them on their balance sheets.”
But it does not go without problems. The simplest problem was getting regulators to develop a plan for providing cryptoactive management, McWilliams said. However, it is difficult to determine how to allow volatile assets as collateral and include them in banks’ balance sheets, she added. “The problem is… valuing these assets and fluctuating their value, which can be almost on a daily basis.”es.