According to comments made by Jelena McWilliams, Chair of the Federal Deposit Insurance Corporation, federal bank regulators are looking to provide more guidance to banks interested in holding cryptocurrencies. In McWilliams' interview with Reuters and in comments made during a conference on October 26, 2021, she expressed her opinion that banks must be allowed into the crypto space, albeit with the appropriate management and risk mitigation. McWilliams recognized that, "[i]f we don't bring this activity inside the banks, it is going to develop outside of the banks."
The comments made by McWilliams provide the most in-depth view yet into what regulators are exploring as part of the cryptocurrency "sprint" team jointly announced in May by the Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency. McWilliams stated that her "goal in this interagency group is basically [to] provide a path for banks to be able to act as a custodian of these assets, use crypto assets, digital assets as some form of collateral." McWilliams also acknowledged some of the thornier issues in regulating crypto assets, including "valuation of these assets and the fluctuation in their value that can be almost on a daily basis."
While the specifics of the regulatory guidance remains unclear, McWilliams acknowledged that "[a]t some point in time, we're going to tackle how and under what circumstances banks can hold [cryptocurrencies] on their balance sheet."
The Reuters article summarizing McWilliams' interview and conference remarks can be found here: https://www.reuters.com/business/finance/us-regulators-exploring-how-banks-could-hold-crypto-assets-fdic-chairman-2021-10-26/.
DISCLAIMER: This article was originally published by McGonigle PC prior to their combination with Davis Wright Tremaine LLP. The article is published here with permission.