Author
Sujha Sundararajan
Author
Sujha Sundararajan
Share
Three US Fed banking regulators issued a joint statement on Monday, reminding banks that offer crypto custody to follow risk-management considerations.
The Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) discussed how existing laws, regulations and risk-management protocols apply to crypto ‘safekeeping.’
The agencies clarified that the statement does not create any new supervisory expectations, emphasizing the need for stronger risk-management practices.
“[The statement] reminds banks that provide or are considering providing safekeeping of such assets that they must do so in a safe and sound manner and in compliance with applicable laws and regulations.”
Banks Can Provide Crypto Custody in Two Forms: Fed Agencies
The trio of agencies stressed that the proper way to custody such assets involves “controlling the cryptographic keys associated with the crypto-asset in a manner that complies with applicable laws and regulations,” a detailed 7-page memo read.
Further, banks can offer crypto custody in two forms: fiduciary and non-fiduciary, they added.
In a fiduciary arrangement, where banks are legally authorized to act on behalf of clients like a trustee, specific federal regulations (12 CFR 9 or 150) must be followed. Additionally, state laws and regulations, and any other applicable legal provisions, are also in place, the statement noted.
For non-fiduciary services, banks are mandated to implement robust protections to safeguard customers’ digital assets. This includes protection against cyber threats, data loss and mismanagement of private keys.
Fed Agencies’ Pivot From Previous Crypto Guidances
US Fed agencies have previously restricted banks from easily engaging with crypto businesses under the Biden administration.
In March, the current crypto-friendly President Donald Trump signed a long-awaited crypto order that sets a federal agenda meant to move U.S. digital assets businesses into friendly oversight.
As a result, the FDIC officially removed “reputational risk” as a factor in bank supervision, creating a significant victory for the crypto space.
The agency also issued new guidance that cleared the way for supervised banks in the US to engage in crypto-related activities without seeking prior approval.
The latest statement from the agencies arrives on the first day of the U.S. House of Representatives’ self-described Crypto Week. Starting July 14, the GOP aims to push three key crypto bills this week, including the CLARITY Act, the Anti-CBDC Surveillance State Act, and the Senate’s GENIUS Act.
Trending News
RecommendedPopular Crypto TopicsPrice Predictions