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The U.S. economy has experienced a pivotal shift with a landmark joint declaration favoring cryptocurrencies, coinciding with Bitcoin’s stellar rise. Historically, the Biden administration took a skeptical stance towards digital currencies, yet recent developments indicate a significant policy turnaround. What precisely does this groundbreaking crypto proclamation spell for the future?
What’s in the Cryptocurrency Declaration?
A joint communication from the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve has emerged concerning banks and digital asset management. This officially acknowledged the feasibility of banking institutions managing cryptocurrencies parallel to traditional assets, marking a major deviation from previous cautionary advisories.
Crypto custody services are defined as the management of digital assets on a client’s behalf. This new policy empowers banks to extend other fiduciary services alongside these custody offerings, whether through fiduciary relationships or not.
Can Banks Handle Crypto?
Yes. Within this new framework, banks can administer both custody and management operations for cryptocurrencies. The directive emphasizes the requirement for experienced personnel to oversee such services. It further encourages proactive risk management strategies in place.
“The OCC, Fed, and FDIC reaffirm that banks can offer custody services for crypto assets like Bitcoin within existing risk management expectations.”
In a reaffirmation of regulatory standards, the Federal Deposit Insurance Corporation, Federal Reserve Board, and OCC collectively stated:
“Federal banking regulatory agencies have issued a joint statement today as part of their efforts to clarify banks’ activities related to crypto assets. The statement highlights potential risk management considerations for banks holding crypto assets for clients or offering related custodial services.”
The release highlights current risk management practices for handling crypto assets while emphasizing compliance with legal and regulatory guidelines. While not establishing new supervisory norms, agencies are committed to clarifying banks’ crypto-related operations.
Key conclusions drawn include:
- Banks can now officially manage crypto in the same way as conventional assets.
- There is no introduction of new supervisory expectations, maintaining focus on current regulations.
- Emphasis is placed on proactive risk management strategies for crypto asset handling.
These updates, initiated during the previous administration, grant banks more freedom in engaging with cryptocurrency services, indicating a promising shift in the industry’s landscape.