According to the letter, “It is difficult for institutions, as well as the FDIC, to adequately assess the safety and soundness, financial stability, and consumer protection implications without considering each crypto-related activity on an individual basis.”
Consequently, the FDIC wants to receive all information necessary for it to “engage with the institution regarding related risks” stemming from their current or intended crypto-related activity and “provide relevant supervisory feedback to the FDIC-supervised institution, as appropriate, in a timely manner.” Institutions are encouraged to contact state regulators simultaneously.
The note advises that institutions “should be able to demonstrate their ability to conduct crypto-related activities in a safe and sound manner.” Descriptions of the risk considerations facing the institutions, broken down into categories of safety and soundness, financial stability and consumer protection, make up the bulk of the letter.
The FDIC partnered with the Office of the Comptroller of the Currency in a “policy sprint” focused on crypto assets last year, and in November, it released a statement on their findings, where the agencies outlined a “plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations.”
In February, New Jersey Rep. Josh Gottheimer released a draft of his Stablecoin Innovation and Protection Act of 2022. If adopted, the legislation would designate stablecoins issued by insured depository institutions or certain nonbank issuers as “qualified” and require the FDIC to establish a Qualified Stablecoin Insurance Fund.
U.S. President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets listed the FDIC chairperson among officials who are “encouraged to consider the extent to which investor and market protection measures within their respective jurisdictions may be used to address the risks of digital assets and whether additional measures may be needed.”