In order to maintain control over the rapidly evolving asset, US regulators are working to establish a clearer path for banks and their clients interested in holding cryptocurrencies reports an important US bank regulator.
The chair of Federal Deposit Insurance Corporation, Jelena McWilliams, was part of a Reuters interview on Monday. Here she announced that bank regulators are trying to come up with a detailed plan that will help banks in their activities with cryptocurrency.
Clearer guidelines for holding cryptocurrencies in custody to enable client trading, utilizing them as collateral for loans, or even keeping them on their balance sheets as traditional assets are all possibilities that such a roadmap could contain.
She believes that banks should be allowed to take part in this space and also manage and prevent possible dangers.
McWilliams is worried that if such a thing does not happen inside banks, then it will take place outside them and the officials will be incapable of regulating it.
Earlier in May, Fed, OCC, FDIC declared to be in ‘sprint’ on crypto regulation and now McWilliams’ interview sheds light on it.
The team’s purpose was to ensure that the three primary US bank regulators – the FDIC, the Federal Reserve, and the Office of the Comptroller of the Currency – were all on the same page when it came to cryptocurrency regulation.
The crypto market is taking the world by storm and regulators in the US have still to keep up with it.
Some agencies waited and did not rush into acting, however, others were less patient. The previous leaders of OCC adopted a bold approach to introducing Bitcoin into banks, including endorsing bank custody services for cryptocurrency.
Michael Hsu, the Acting Comptroller of the Currency, says such choices are currently being reviewed.
There is still a lot of confusion in this area, as some banks did not set any clear regulations. U.S. Bancorp (USB.N) stated earlier this month that it will start offering crypto custody to institutional investors.
However, McWilliams, a Trump administration Republican holdover, states that regulators are still looking for a method to include crypto into standard bank monitoring.
Her main purpose is to essentially pave the way for banks to function as custodians of these assets, using crypto and digital assets as collateral.
She is positive that with time, they will figure out how banks and cryptocurrencies can work together. Yet, she is also aware of the difficulties of such a mission.
Getting regulators to lay out a plan for granting custody to crypto coins would be the smoothest way, she added. She stated that figuring out how to accept the volatile asset as collateral and include it on bank balance sheets is tough.
The biggest challenge is the pricing of these assets, as well as the daily fluctuations in their worth. You must determine the capital and liquidity treatment to be applied to such balance sheet holdings, concludes McWilliams.
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