Federal Reserve, FDIC, OCC discuss allowing cryptocurrencies on balance sheet – Bitcoin News Control

A team of US banking regulators is working on how to allow banks to offer crypto services and hold cryptocurrencies on their balance sheets. The chairman of the Federal Deposit Insurance Corporation (FDIC) said, “If we cannot bring this activity inside the banks, it is going to develop outside the banks … Federal regulators will not be able to control it.”

US regulators will set clear rules for banks to deal with crypto

Jelena McWilliams, chairwoman of the Federal Deposit Insurance Corporation (FDIC), told Reuters in an interview at a FinTech conference on Monday that a team of U.S. bank regulators was working to provide a roadmap for banks to engage with crypto assets.

The group includes the FDIC, the Federal Reserve and the Office of the Comptroller of Currency (OCC). Randall Quarles, vice chair of supervision at the Federal Reserve, announced the cooperation between the three U.S. regulators in May.

McWilliams told a conference panel:

My goal in this intergovernmental group is to provide a way for banks to act as custodians of these assets, to use crypto assets, to use digital assets as collateral. Can hold them.

While it is easy for banks to establish clear rules for providing custody services, the FDIC boss explains how it is difficult to understand how a volatile asset can be allowed to be used as collateral and be included in a bank balance sheet.

He was quoted as saying: “The valuation of these assets and the fluctuations in their value that can happen almost every day … you have to decide what kind of capital and liquidity treatment will be allocated to such balance sheet holdings.”

The OCC, led by Brian Brooks, clarified in June 2020 that National Bank and Federal Savings Associations could provide cryptocurrency custody services to customers. However, Brooks has resigned and the new acting regulator of the currency, Michael Hu, has called for a review of the cryptocurrency standards established by the OCC before taking office.

“I think we need to allow banks in this area, while properly managing and mitigating risk,” McWilliams commented, detailing:

If we can’t bring this activity inside the banks, it is going to develop outside the banks … Federal regulators will not be able to control it.

What do you think about banks holding cryptocurrencies on their balance sheets? Let us know in the comments section below.

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