US banking regulators want to clarify crypto rules in 2022

The Federal Reserve, Federal Deposit Insurance Corporation (or FDIC), and Office of the Comptroller of the Currency (OCC) have issued a joint statement announcing a plan to clarify the rules and regulations on how banks can use cryptocurrencies in the coming year (through Bloomberg).

The agencies say they focus on setting expectations for what banks can do when it comes to holding crypto, allowing customers to acquire crypto, issue their own stablecoins (or cryptocurrencies whose value is pegged to a fiat currency). such as the US dollar), and taking crypto as collateral for loans and holding it on their balance sheet. According to the letter, the aim is to ensure that consumers are protected and that banks act responsibly. Regulators also say it’s an effort to ensure the financial sector isn’t being used to launder ill-gotten currency, something the Treasury Department has been focusing on lately.

The OCC has Already made steps in this direction — on Tuesday, the acting inspector issued a letter clarification of decisions the office had made in 2020 and early 2021. Now, the letter says, banks will have to seek approval from regional regulators before entering certain crypto fields.

Previously, the Comptroller said banks were allowed to: hold cryptocurrencies for customers like assets used to back stablecoins. Banks was also told they can use stablecoins and act as nodes on blockchain networks. Although financial institutions can still carry out these activities, they will have to demonstrate to regulators that they can do so safely and responsibly.

These announcements come as some crypto companies are clashing with regulators over which legal classifications their products fall under. Recently, Coinbase canceled its lending program after a public feud with the Securities and Exchange Commission over whether what it sold counted as securities (and would therefore be under heavier legal scrutiny). The Treasury has also proposed reporting major cryptocurrency transfers to the Internal Revenue Service and has asked Congress to regulate stablecoins.