Cryptos Hit Session Highs After Regulators Announce Plan To Define Legal Crypto-Related Bank Activities In 2022
A group of Federal bank regulatory agencies today issued a statement summarizing their interagency efforts focused on crypto-assets and providing a roadmap of future work related to crypto-assets. The statement (link here) describes the preliminary work conducted by the agencies and summarizes the agencies’ plan to provide greater clarity throughout 2022 on whether certain crypto-related activities conducted by banking organizations are legally permissible, and related expectations for safety and soundness, consumer protection, and compliance with existing law and regulations.
The Office of the Comptroller of the Currency, whose next head may or may not be the Marxist/Leninist/Communist Saule Omarova, the Federal Reserve and the Federal Deposit Insurance Corporation summarized their policy “sprint team’s” work over 2021 in the statement, saying the group studied crypto custody, sale, loans and payment activities that banks and similarly regulated entities might want to take part in.
According to the statement, “the emerging crypto-asset sector presents potential opportunities and risks to banking organizations, their customers, and the overall financial system. The interagency sprints quickly advanced and built on agencies’ combined knowledge, which helped identify and assess key issues related to potential crypto-asset activities conducted by banking organizations.”
The interagency sprint team focused on creating a common vocabulary around digital assets, identifying possible risks to consumers and evaluating how regulations currently apply to digital assets, the document said.
“Based on this preliminary and foundational staff-level work, the agencies have identified a number of areas where additional public clarity is warranted. As a result, the agencies have developed a crypto-asset roadmap that is summarized below,” the document said.
Over the next year, the group plans to “provide greater clarity” on whether custody, purchase/sale, loan, stablecoin issuance and holding crypto assets are legally permissible for regulated institutions, and how banks should comply with laws if so.
“The agencies also will evaluate the application of bank capital and liquidity standards to cryptoassets for activities involving U.S. banking organizations and will continue to engage with the Basel Committee on Banking Supervision on its consultative process in this area,” the document added.
Acting Comptroller of the Currency Michael Hsu revealed the sprint team in May during a Congressional hearing, saying at the time that the group could create a common definition of cryptocurrency for legal purposes in the U.S.
The news of continued benign regulatory intervention helped push cryptos prices to session highs even as real yields are surging dragging down both tech names and gold.
The full statement is below (pdf link)