Three U.S. Federal agencies released an unanticipated joint document this week. It included comments as well as an outline of regulatory crypto priorities for 2022. These agencies were the Federal Deposit Insurance Corporation (Board of Governors), the Federal Reserve System (Federal Reserve System), and the Office of the Comptroller of the Currency.

“As supervised institutions [banks] seek to engage in crypto-asset-related activities, it is important that the agencies provide coordinated and timely clarity where appropriate to promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules,”
This statement has been noted.

This public announcement is significant in that it marks the first official, cross-agency statement of regulatory intent regarding cryptocurrency assets and the banking industry within the U.S. Over the past few months, these regulatory bodies coordinated on a series of “policy sprints” focusing on crypto assets. The intent of these “sprints” was to assemble the correct experts from each regulatory team to conduct preliminary analysis on a range of crypto topics.

The agencies identified several areas in which additional disclosure would be necessary based on the early work of staffers. The following is a crypto-asset roadmap was developed by them together.

In 2022 the agency plans to clarify whether crypto-asset transactions by banks are legal. It also intends to raise consumer safety and protection expectations and ensure compliance with current laws.

• Safekeeping crypto-assets and traditional custody services
• Services for ancillary custody
• Facilitation for customer sales and purchases of crypto-assets.
• Crypto-assets can be used to collateralize loans
• Stablecoin distribution and issuance
• Activity involving holding crypto-assets in-balance sheets

It was further stated that the bank regulators would monitor and intervene in market changes as well as the cryptocurrency-asset class beyond their articulated roadmap. It also stated that these bank regulators would partner with other “relevant authorities” as needed.

To The Flipside

• Earlier this month the Presidential Work Group on stablecoins issued its initial report, which said nothing and took no action – choosing instead to kick the regulatory issue over to Congress.
• SEC and Fed issued several opinion papers and policy statements since then.
• These documents are merely rhetorical jockeying to ensure that regulatory boundaries will be in place once Congress acts.

Why you should care

Don’t be surprised if crypto regulations in the U.S. become fragmented. It’s possible the SEC could oversee crypto exchanges, crypto derivatives, and exchange traded funds; while the Fed governs crypto services offered by banks, stablecoins, and token custody – and that’s just for starters.

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