A team of US regulators are looking for ways to introduce various ways through which banks could use crypto on their balance sheets, facilitate client trading and provide custody.
Speaking to Reuters in an interview, the chair of the Federal Deposit Insurance Corp. (FDIC), Jelena McWilliams said banks need to be allowed to get involved in the crypto world. She said, If we don’t bring this activity inside the banks, it is going to develop outside of the banks. The federal regulators won’t be able to regulate it.”
Jelena confirmed that a team of US bank regulators are already exploring a roadmap that will allow the banks to get involved with crypto assets. They are looking to provide the banks and their clients a way to access the crypto assets while they keep control over the ever-developing digital currencies world.
The FDIC is one of the leading deposit insurance providers for federally regulated institutions. By looking into ways to integrate Bitcoin and other cryptos into the banks, it is a show of how much the digital currencies have grown in prominence and is almost operational like the traditional finance sector.
This is not the first time in this year when the FDIC is looking into cryptos in relation to the banks. Earlier in May, while speaking to the Federalist Society, the agency sought to know the approach of the banks towards the cryptos and what role it could play.
By then the agency was all about ensuring all three main US Bank regulators are on the same page when it comes to digital currencies. The other regulators are the Office of the Comptroller of the Currency (OCC) and the Federal Reserve.
Given the massive rise of crypto prominence, the various US bank regulatory agencies have been approaching them differently. For example, while the OCC was upfront in embracing digital currencies, the other agencies were not so fast.
The lack of a unanimous regulatory framework has also meant the banks don’t have any guidelines when it comes to adopting digital currencies. For example, so far some banks are already offering crypto-related services even without clear regulations. This calls for the need for a clear stand among the financial regulators.
What is the future of crypto in the banking sector?
The banks and the institutional investors are some of the entities to have taken so long to embrace digital currencies. One of the reasons for the laxity has always been the volatile crypto nature. Banks are the custodian of the traditional economy, therefore to accept the digital currencies would come with unassured safety to investors.
Things however in the financial market are fast changing. For example, after delaying or rejecting all the earlier proposals for an ETF, the SEC, at last, approved the setting up of the first ETFs in the US. Given the regulatory agency had earlier claimed the crypto market was easily manipulated, approving the ETF shows the market has become more stable.
With some banks already embracing digital currencies, more of them will be offering crypto-related services once the banking regularities agencies all agree on the proper regulations.
