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The US banking regulators are creating clearer guidelines to help banks deal with cryptocurrency.
Jelena McWilliams is the chair of FDIC and told Reuters that a roadmap was being created for financial institutions.
She stated, "If we don’t bring this activity into the banks it will develop outside the banks."
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As cryptocurrencies grow in popularity, US regulators are establishing clearer guidelines for banks dealing with cryptocurrency.
Jelena McWilliams is the chair of Federal Deposit Insurance Corporation. She told Reuters Monday that a roadmap was being created for financial institutions. It includes clearer rules regarding holding cryptocurrencies in custody.
She told Reuters that she believes banks should be allowed to operate in this area, while managing and mitigating risks. "If we don’t allow this activity to be brought inside the banks it will develop outside the banks. ... It won't be possible for federal regulators to regulate it."
McWilliams stated that she also wants regulators to outline a path for banks to use cryptocurrency assets as collateral. She also explained how banks can keep them on their balance sheet.
The US regulators have not yet issued a definitive position on how banks should or could hold cryptocurrencies.
The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency discussed the creation of an "interagency sprint group" to focus on crypto regulation. The Fed is currently working on a paper covering stablecoins. Meanwhile, the White House has established a working group to examine cryptocurrency regulations.
Politico recently reported that in January, a Trump administration top regulator allowed banks to trade cryptocurrencies for clients. OCC acting Comptroller Michael Hsu is currently reviewing the decision. It wasn't publicized until October 22.
Despite the lackluster regulatory clarity, the US's largest banks have not resisted offering digital asset services.
US Bank launched a crypto custody program for fund managers in October amid increasing demand. JPMorgan Chase granted all clients of its wealth management division access to crypto funds in July. Citigroup announced a month later that it was considering trading bitcoin futures following Goldman Sachs in May.
Cryptocurrencies have experienced rapid growth in recent years despite regulatory restrictions and wild price swings. Recent Bank of America analysts stated that the space is too large to ignore.
