- US regulators have released a blueprint to guide the conduct of cryptocurrency market participants in 2022.
- The guidelines place a focus on banks as they look to provide cryptocurrency offerings to their clients.
- Regulators had previously made recommendations to Congress for regulations of stablecoins in October.
Gary Gensler once referred to cryptocurrencies as the “Wild Wild West” and said that he will try to suppress the ecosystem. It seems the task is a herculean one and will require synergy between financial regulators.
The Sprint List
US financial regulators have released an inter-agency policy memo that spells out the blueprint for further regulation in the cryptosphere. The to-do list popularly referred to as the “crypto sprint” is a concerted effort of the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.
The joint statement reduces its scope to banks and other financial institutions with a focus on crypto-asset custody, facilitation of customer purchases and sale of cryptocurrency assets, crypto loan, and all payments involving the use of stablecoins. Regulators are also looking to improve existing regulations on “activities that may result in the holding of crypto-assets on a banking organization’s balance sheet.”
“Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations,” the letter stated.
The framework highlights that the next steps of the agencies will be to use consistent and uniform language in the crafting of future regulations and legislation. The cryptocurrency ecosystem has suffered from issues of definitions in the past with the issue reaching a heightened state over the use of the term broker in the bipartisan Infrastructure Bill.
The joint letter indicated that it will “continue to engage” with the Basel Committee on Banking Supervision in charting a clear path for banks and cryptocurrencies. The Basel Committee is a leading player in banking regulations around the globe, made up of 45 members from 28 jurisdictions. The Committee has previously proposed a capital requirement for banks related to cryptocurrencies to be subject to a higher risk weighting of 1,250%
The Office of the Comptroller of the Currency has released its own statement chronicling the strides it has taken in an attempt to rein in the foray of banks in the space. The new regulation by the OCC will require banks to seek approval from regional regulators before making cryptocurrency offerings.
Last month, the President’s Working Group on Financial Markets in conjunction with the FDIC and the OCC released a report on stablecoins. The report recommended “bank-like” regulations for the issuers of stablecoins after identifying potential risks associated with the asset class.