Gushiken Yona
The FDIC shakes up crypto banking rules, scrapping a key approval requirement and giving financial institutions more freedom to engage with digital assets—so long as they can handle the risks.
Prior FDIC Notification Rule Rescinded
The Federal Deposit Insurance Corporation announced Friday it is withdrawing a specific directive issued just two years ago. That rule, known formally as Financial Institution Letter FIL-16-2022, had required banks supervised by the FDIC to formally notify the agency and wait for its non-objection before initiating any crypto-related activities.
This prior notification system served as a distinct checkpoint for banks venturing into the digital asset space. Its removal signals a procedural change in how the agency oversees these activities.
Permitted Crypto Activities Allowed Without Pre-Approval
In updated guidance replacing the rescinded letter, the FDIC clarified the path forward for banks. The agency affirmed that institutions under its watch “may engage in permissible crypto-related activities without receiving prior FDIC approval.”
The key condition is that the activities must be legally permissible for banks to undertake in the first place. This shift brings the process for engaging in approved crypto activities more in line with how banks typically approach other new business lines, removing a crypto-specific hurdle.
FDIC Acting Chairman Travis Hill characterized the update as a significant policy shift. “With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” Hill stated. “I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”
Market Reaction: A Step Towards Crypto Mainstreaming?
The policy shift drew comment from figures within the technology and investment community. Via the social media platform X, crypto czar David Sacks remarked on the change, stating, “The FDIC has made it easier for banks to engage in crypto-related activities. This is one of the best ways to mainstream crypto further.”
He also expressed appreciation to the agency and its Acting Chairman, Travis Hill. Such reactions suggest the move is seen by some observers as potentially facilitating broader integration of digital assets within traditional finance.
Risk Management Remains Central to FDIC Oversight
While eliminating the pre-approval step, the FDIC strongly emphasized that banks are not absolved of responsibility. The agency stated it “expects that FDIC-supervised institutions conduct all activities in a safe and sound manner and consistent with all applicable laws and regulations.”
Banks must continue to rigorously evaluate and manage the unique dangers associated with digital assets. The FDIC specifically highlighted the need to consider “market and liquidity risk; operational and cybersecurity risks; consumer protection requirements; and anti-money laundering requirements.” Institutions should also maintain communication with their FDIC supervisory teams regarding these activities as appropriate.
Ongoing Regulatory Scrutiny and Future Guidance Expected
This policy adjustment does not signify a wholesale deregulation of bank involvement in crypto. The FDIC confirmed its continued participation in the President’s Working Group on Digital Asset Markets and stated it “expects to issue further guidance in the future to provide additional clarity regarding banks’ engagement in particular crypto-related activities.”
Moreover, the FDIC intends to collaborate with other federal banking agencies, such as the Federal Reserve and the Office of the Comptroller of the Currency. The goal is to replace joint agency statements on crypto-asset risks issued in early 2023 with potentially updated guidance or regulations, suggesting a continuing effort to refine the overall framework governing digital assets in the U.S. banking system.
Read More
- Rally Ahead? Shiba Inu Treat Trading Volume Soars Triple Digits
- Game Changer? Japan Moves to Classify Crypto as a Financial Product
- Bitcoin Caught in Crossfire: Retail Weakens, Institutions Buy the Dip
Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
