Crypto

The FDIC could help define how cryptocurrency operates in the US

The FDIC could help define how cryptocurrency operates in the US

The FDIC’s inspector general wants the agency to step into crypto regulations

An evaluation report on the Federal Deposit Insurance Corporation’s (FDIC) cryptocurrency asset risk strategy was published by the United States Office of the Inspector General, with a redacted version recently made public.

The OIG said that a “bottom-up” strategy to crypto risk was adopted by the FDIC in early 2022, which included comprehending the crypto-related activities of managed institutions, delivering case-by-case supervisory feedback, and “providing broader industry guidance on an interagency basis.”

The FDIC distributed letters asking institutions about their crypto activities, with 96 responding about their current use or future interest in crypto activity as of January 2023. The FDIC hasn’t released the number of organizations that received feedback, as some have been recommended to suspend crypto-related activity until the FDIC completes its evaluation.

The OIG discovered that the FDIC began developing strategies regarding crypto-asset risks, which were unfinished. “However, the Agency has not assessed the significance and potential impact of the risks. Specifically, the FDIC has not yet completed a risk assessment to determine whether the Agency can sufficiently address crypto-asset-related risks through actions such as issuing guidance to supervised institutions.”

The OIG also says that the FDIC should note its risk assessments, determine their importance, and create alleviation strategies. The FDIC’s feedback process in reply to the letter was vague, with no set timeframe for studies or clear solution to the process. However, the OIG made two proposals to resolve those concerns.

The OIG categorized its suggestions as insignificant, noting that the FDIC had already met the recommendations and plans to finish correcting the process by late January 2024.

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