Regulators in the US announce a “crypto sprint” plan. A policy agenda for regulating cryptocurrencies was published on Tuesday. By the Federal Reserve and other financial regulators in the United States. As debates about how to provide oversight for the burgeoning sector continue.
The so-called “crypto sprint,” as it is referred to by officials, outlines a to-do list for 2022. That will provide greater clarity to cryptocurrency players. On the rules of the road.
When it comes to cryptocurrency, it summarizes plans by the Federal Reserve. The Federal Deposit Insurance Corporation (FDIC). And the United States Office of the Comptroller of the Currency (OCC). It also discusses how financial players should comply with existing regulations on safety and soundness. As well as consumer protection, when it comes to cryptocurrency.
Officials from the Federal Reserve said in a statement that “the interagency sprints moved fast. And expanded on agencies’ combined knowledge. Which assisted in the identification and assessment of critical issues. Linked to prospective crypto-asset operations done by financial entities.”
Regulators will pay close attention to how banks could safely keep cryptocurrency assets. How they would handle clients’ fiat currency being exchanged for cryptocurrencies. And how they would facilitate cryptocurrency purchases. The roadmap also includes topics. Such as settling and executing trades, loans backed by cryptocurrency assets. Issuing stablecoins, tax services. And whether or not to keep cryptocurrency assets on the balance sheet.
The authorities will also examine whether bank capital and liquidity requirements. Should be applied to crypto assets held by banks, stating that they will continue to confer. With the Basel Committee on Banking Supervision on the subject of capital needs in the future.
The Basel Committee, part of the BIS, sets worldwide banking standards
The Basel Committee, which is a division of the Bank of International Settlements, is responsible. For setting global standards for banking rules. There are two types of capital requirements that they have proposed. Including that cryptocurrencies such as bitcoin. Should be subject to a greater risk weighting of 1250 percent compared to traditional assets.
However, prominent banks including as JPMorgan Chase and Deutsche Bank are opposed. To this capital requirement, claiming that it is excessively conservative. And will prevent banks from participating in the cryptocurrency market.
The agencies noted that they will continue to watch developments in crypto-assets. And that they may address further issues as the sector develops.
In the words of Jaret Seiberg, an analyst with Cowen & Co., “Regulators are promising actions that will almost certainly have an impact. On decentralized finance and cryptocurrency trading.” According to the report, “our hypothesis that regulators. Intend to handle crypto solutions in the same way. As the product it attempting to imitate is broadly supported.”
Officials are putting out their plans for projects in the cryptocurrency field following. The release of proposals by the President’s Working Group on Financial Markets. On how to regulate stablecoins, which tasked regulators with using their existing authorities. To control the sector. This now applied to the entire field of cryptography.
OCC weighs in
The OCC, which governs national banks, is clarifying that national banks. And federal savings associations can engage in cryptocurrency transactions. If regulators approve.
Few banks are now using crypto, but those who wish to do so. In the future must obtain the agency’s clearance.
Before dealing in crypto, banks must show authorities that they have adequate risk management measures in place. AML, sanctions requirements, and consumer protection laws. Are among the issues that institutions must manage, the agency said on Tuesday. Only after approval may the bank engage in crypto activity.
The OCC considers bitcoin services to be a modern type of traditional banking that banks can do. The OCC previously ruled and reiterates that banks may maintain deposits. That also serve as reserves for stablecoins backed 1:1 by a single fiat currency.
Banks can also use distributed ledgers and stablecoins to conduct payments. Including buying, selling, and issuing them.