On Friday the Federal Deposit Insurance Corporation (FDIC) said that banks no longer have to request permission to engage in digital assets, rescinding a 2022 notification that was used to block bank crypto activities, as well as using blockchain for payments. However, another document rescinded by the Commodity Futures Trading Commission (CFTC) suggests that there’s a risk regulators go too far in trying to appease the crypto community. Highlighting risks and suggestions on how to handle them should be a positive, provided regulators don’t attempt to block activities when the risks are adequately addressed.
Stepping back, the recent release of FDIC documents under a freedom of information request that was litigated by Coinbase, have shown that banks did not just have to ask permission from the FDIC, but were positively dissuaded from engaging in activities involving cryptocurrency as well as blockchain transactions that did not use crypto. The FDIC’s move aims to draw a line on that. It also responds to a request from banking associations to address the permission issue.
That said, there is a reasonable caveat that all activities should be conducted in a safe and sound manner. The FDIC also said it was reviewing two sets (1, 2) of joint guidance given in 2023 by the FDIC, Federal Reserve and OCC. We’ll come back to that.
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