Crypto News FDIC Chair Says “We Need to Allow Banks” to Custody Crypto

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  • The cryptocurrency “sprint team” has been meeting with the aim of creating a way for banks and other institutions to have access to crypto assets.
  • Federal Deposit Insurance Corporation FDIC Chair Jelena McCWilliams believes that it is time for banks to accept cryptocurrency.
  • ” If we don’t bring it inside the banks, then it will develop outside the banks,” she stated.

The inter-agency “sprint” crypto team was established by the Federal Reserve, OCC and FDIC to allow banks to store crypto assets.

The inter-agency team aims at providing banks with clear rules about using crypto to secure loans, keeping crypto in custody for clients and holding crypto-assets on balance sheets, as well as ensuring control over the booming cryptocurrency market. According to Reuters,

Jelena McWilliams is the chair of the Federal Deposit Insurance Corporation and approved the news, saying that she is working to allow banks to have digital assets. She stated that she believes banks should be allowed to operate in this area, while managing and mitigating risks.

In an effort to target the unregulated cryptocurrency market, the Fed and OCC (the three leading financial regulators in the US) created a “sprint” team in May. McWilliams recently commented on the team’s goals.

McWilliams highlighted the importance of allowing banks to store cryptocurrencies. “If we don’t allow this activity to be brought inside the banks it will develop outside the banks. She added:

My goal in this inter-agency team is to provide a pathway for banks to be able act as custodians of these assets and use crypto assets, or digital assets as collateral. We’ll eventually address how banks can keep them on their balance sheets and in what situations.

McWilliams stated that it would not be difficult to get legislators to create a roadmap to allow banks to store crypto-assets. She acknowledged there would be difficulties, and said it would be difficult for banks to keep a volatile asset as collateral.

” The issue is… the valuation of these assets, and the fluctuation that can occur almost daily,” McWilliams stated. You must decide how much capital and liquidity you will allocate to these balance sheet holdings .”

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Crypto News “Sprint” Team Scrutinized Crypto Lenders

In July, the inter agency team expanded its oversight to BlockFi’s lending and savings platform. They scrutinized the crypto lender for its BlockFi Interest Accounts. Regulatory bodies from many states subsequently asked Celsius, a crypto interest provider, to explain why their lending accounts shouldn’t be considered securities.

The US Securities and Exchange Commission (SEC), warned Coinbase to sue it if it launches its Lend program. Coinbase dropped plans to launch its Lend program after this warning.

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