The banking regulator requires US banks to report whether these entities carry out digital assets transactions.
A United States government entity that controls the activity of financial entities in that nation is raising red flags regarding cryptocurrencies.
The (FDIC) has requested banks to report their activities linked to digital assets in a letter alerting them to probable risks and highlighting some concerns about using said currencies. The agency also asked banks that do not yet work with cryptocurrencies to show whether they try to do so.
The FDIC sent the letter to the CEOs of the banks under its supervision, CoinDesk and Decrypt reported. The regulator requests that banks report to their regional director of the FDIC about their behavior regarding cryptocurrencies, both current and future.
Wall Street Banks Must Highlight the News to the FDIC
The banking regulator included in the letter will lead the reviews of the information brought by the entities and will ask more questions if necessary.
Founded in 1933, the FDIC is an independent US federal entity whose goal is to ensure the recovery of depositors’ money in a bank failure. Most banks in the country, including national banks, get monitored by the entity. According to Decrypt, at least 5,000 banks were active back in 2021.
The agency’s new requests come when an increasing number of the country’s financial institutions have shown an unexpected interest in the new asset class. From financial monsters to the less powerful commercial banks, they have been setting up new methods to bring their customers, products, and services oriented to crypto.
The letter means that nearly all banks connected to Bitcoin and other digital assets, including Wall Street solid entities like Bank of America and Goldman Sachs, must now reveal their crypto behavior to the regulator.
In Line with the Regulators’ Program
According to Coincheck, the regulator’s most recent requests fall under the FDIC’s program focused on digital assets. In October of last year, the then president of the agency, Jelena McWilliams, revealed that the FDIC was working with other US regulators to handle guidelines so that financial entities and institutions could begin bringing services such as the custody and trading of digital assets.
The new FDIC Chairman, Martin Gruenberg, explained the need for national regulators to bring substantial assistance to the banking industry on the new asset class, but not before warning of the risks cryptographic products would mean to the financial structure.
The FDIC requires all FDIC-monitored entities that consider participating in crypto-linked activities to report to the FDIC of their intent and bring all the needed information to allow the FDIC to engage with the entity regarding possible risks.
Any FDIC-supervised entity that already participates in crypto-related activities must immediately report those activities to the FDIC.
By: Jenson Nuñez
