Three major banking regulators in the United States have issued an important statement regarding banks' relationship with crypto assets. The Federal Reserve (Fed), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) reiterated that banks must comply with existing laws and risk management principles when custodial crypto assets on behalf of their customers.
The statement emphasized that the risks banks may face when offering crypto asset custody services should be carefully evaluated, just as with any other new product or service. The institutions clarified in their statements that this statement does not create any new regulatory expectations. Instead, it aims to remind banks of how existing laws and regulations should apply to crypto asset custody activities.
Critical issues banks should be aware of include cybersecurity vulnerabilities, cryptographic key protection, and the management of sensitive data. The agencies' joint statement stated, "A banking institution planning to provide crypto asset custody services should consider the continuous evolution of the crypto asset market and the technology underlying these assets and establish a flexible risk management framework accordingly."
Regulators also emphasized that effective anti-money laundering regulations, audit processes, software infrastructure, and governance controls are required to ensure these activities operate within legal frameworks.
"Crypto Week" has begun
This announcement came as part of the US House of Representatives' "Crypto Week." Various cryptocurrency-related bills are expected to be voted on this week, and comprehensive regulations are expected to take shape. The new legal frameworks aim to establish clearer rules for the cryptocurrency market.
Meanwhile, US crypto policies are being reshaped with the change of presidency. The regulatory changes introduced by the Trump administration indicate a significant easing of restrictive regulations implemented during the previous Biden administration. Notable examples of these changes include the OCC's announcement in May that US banks could trade crypto assets for their own accounts, and the FDIC's lifting of the requirement for banks to provide advance notice for crypto activities.
The appointment of individuals known to be crypto-friendly to the helm of regulatory bodies is another indicator of this political shift. Jonathan Gould, appointed to the OCC by the Senate last week, previously served as general counsel at Bitfury.
The increasing involvement of banking institutions in the crypto space demonstrates the increasingly clear-cut nature of the US's approach to the crypto industry. However, regulators continue to emphasize the need for banks to exercise caution and effectively manage technology-based risks during this process.
