- Main event: FDIC relaxes rules for banks on crypto involvement.
- Concise takeaway: Banks can engage in crypto without prior approval.
- Additional critical impact: Potential increase in bank participation in digital assets.
Banks in the United States can now participate in cryptocurrency activities without seeking prior approval from the Federal Deposit Insurance Corporation (FDIC), as announced on March 29. This policy change impacts regulatory practices pertaining to digital assets.
The new guidelines signal a shift in regulatory approach, enabling banks to more actively partake in blockchain and cryptocurrency initiatives. FDIC Acting Chairman Travis Hill stated the agency is adopting a more open-minded stance towards innovation.
New FDIC Rules Promote Bank Crypto Engagement
The new FDIC policy revokes a prior requirement that banks notify the agency before engaging in crypto activities. This is part of a broader movement to modernize regulatory frameworks and facilitate technology adoption. It marks a reversal from previous policies which limited banks’ crypto engagements following notable industry downturns, such as the Terra stablecoin collapse.
The policy adjustment allows banks to independently manage crypto-related services, leading to potential growth in financial activities involving digital assets. This could result in increased innovation and competition across the sector, changing how banks operate within the financial ecosystem.
Industry reactions are generally positive. Rob Nichols, President of the American Bankers Association, emphasized the importance of regulatory clarity for innovation. Meanwhile, the Comptroller of the Currency reaffirms specific crypto activities as permissible, pushing for consistent risk management.
“America’s banks are actively evaluating ways to compete safely and responsibly across the financial services ecosystem, and this type of regulatory clarity is critical to enhancing innovation in the space.”
FDIC Shifts Post-FTX, Banks Heighten Risk Protocols
Did you know? In 2022, regulatory caution saw the FDIC and other regulators temporarily halting some crypto activities following significant market events, like the FTX collapse.
FTX Token (FTT) is currently priced at $1.20, holding a market cap of $394.15 million as per CoinMarketCap data. Trading volume in the past 24 hours reached $34.25 million, reflecting a 4.62% price increase. Despite this, FTT has dropped 63.99% in the last 90 days.
The Coincu research team notes that these regulatory changes may signal financial paradigm shifts with growing industry involvement in crypto assets. Banks must develop strong risk management protocols to navigate this evolving landscape, aligning with international regulatory trends.
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