Friday, May 27 2022

On April 7, the FDIC issued a letter from the financial institution (FIL-16-2022) calling on all FDIC-supervised hunches that intend to engage or are currently engaged in activities involving or related to crypto assets to notify the FDIC. .

The FDIC has established security and soundness standards for all institutions supervised by the FDIC (Section 39 and Part 364 of the FDIC Rules). Activities involving new and rapidly emerging technologies can amplify the risk for the insured deposit-taking institutions themselves, consumers and the Deposit Insurance Fund. Thus, institutions supervised by the FDIC are requested to provide information in accordance with the risk considerations below which will be used by the FDIC to provide relevant supervisory feedback.

  • Security and solidity. Crypto has ownership validation issues, accounting, auditing, and financial reporting difficulties, liquidity risks, anti-money laundering/anti-terrorist financing implications, and exposure to IT risks. Crypto assets also raise concerns about the ability of an FDIC-insured depository institution to manage these risks and exposures.
  • Stability of the financial system. The FDIC warns that a disruption in crypto-asset transactions or crypto-related activity could lead to a “run” on financial assets backing a crypto-asset or crypto-related activity, which could disrupt the markets of critical funding. The FDIC warns that these risks could potentially destabilize an entire financial institution.
  • Consumer protection. The FDIC believes that consumers may not understand the role of banking or the speculative nature of certain crypto assets compared to traditional banking products. The FDIC explains that institutions engaged in crypto activities struggle to effectively manage enforcement of consumer protection requirements, including laws relating to unfair or deceptive acts or practices.

put into practice: FDIC-supervised institutions that engage or plan to engage in crypto-related activity should promptly notify the appropriate FDIC Regional Manager outlining the activity in detail and the institution’s proposed timeline for engaging in the activity.

Previous

STEYR Recognized as Red Dot Design Award Winner for Terrus

Next

FIRSTRUST BANK SUBSIDIARIES APEX MORTGAGE AND FIRSTLEASE MERGE TO BECOME APEX COMMERCIAL CAPITAL |

Check Also