FDIC wants advance notice of banks' crypto plans

The Federal Deposit Insurance Corp. has joined a growing list of federal agencies weighing in on financial institutions’ cryptocurrency activities. 

The FDIC on Thursday issued a letter to supervised banks making it clear that they should inform the agency if they are dealing in crypto or plan to do so. FDIC-supervised institutions should notify a regional director. 

The notice should describe the activity in detail and include a proposed timeline for engaging in the activity. 

The FDIC will request more information – and provide feedback – on a case-by-case basis. 

“Crypto-related activities present new, heightened, or unique credit, liquidity, market, pricing and operational risks that could present safety and soundness concerns,” the FDIC said. “For example, there are fundamental ownership issues, including whether it is possible for ownership to be clearly validated and confirmed.” 

The Office of the Comptroller of the Currency chimed in on crypto in November, stating that it is “legally permissible” for nationally chartered banks to provide crypto products/services. The services must be offered through a third-party provider and the bank must have “controls in place to conduct the activity in a safe and sound manner.” 

The National Credit Union Administration in December stated that credit unions have the authority to forge relationships with third-party crypto firms. 

The OCC and NCUA stressed that regulated institutions must make it clear that crypto assets are not insured. 

President Biden signed an executive order on March 9 instructing numerous federal agencies, including the Fed and the Treasury Department to research digital assets to craft a national policy.

The FDIC's letter was issued on the same day that Treasury Secretary Janet Yellen said in a speech that she wants to see a "comprehensive" regulatory approach to crypto that would focus on crypto's potential risks.