Jelena McWilliams, the Chair of the Federal Deposit Insurance Corporation (FDIC), one of the country’s top financial regulators, has stated that she believes banks should be allowed to hold cryptocurrencies such as Bitcoin both for themselves and their clients.
She also revealed that she is working on formally allowing banks to hold crypto-assets such as Bitcoin.
Banks Should Be Allowed In The Crypto Space
Speaking during an interview with Reuters, McWilliams stated that she is in favor of allowing banks to hold cryptocurrencies such as Bitcoin, both for their clients and themselves.
“I think that we need to allow banks in this space while appropriately managing and mitigating risk.”
The Chair’s comments come as an interagency team comprising staff from the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency (OCC) finish up their work on coordinating crypto policies for banks in the United States.
McWilliams indicated that the group would examine rules for holding crypto on the company balance sheets, a strategy companies such as Tesla and MicroStrategy have already employed.
“My goal in this interagency group is to basically provide a path for banks to be able to act as a custodian of these assets, use crypto assets, digital assets as some form of collateral.”
A Case Of Deja Vu
The current scenario seems like a repeat of when Brian Brooks, who was the former Chief Legal Officer at Coinbase, directed the OCC to establish rules that would allow savings associations and federal banks to take custody of crypto assets on behalf of their clients.
Brooks had stated while releasing a letter interpreting the rules stating,
“From safe deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today. This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
Put On Hold
However, the rules drafted by the OCC under Brian Brooks were put on hold by the current comptroller Michael Hsu, who had assumed charge in April. Calling for a review of the policies, Hsu wrote to the House Committee on Financial Services stating,
“My broader concern is that these initiatives were not done in full coordination with all stakeholders, nor do they appear to have been part of a broader strategy related to the regulatory perimeter.”
Banks Could Trade Crypto
McWilliams’ comments come after a Politico report released last week stated that after former President Trump’s defeat at the polls, the OCC staff had determined that banks could trade crypto on behalf of their clients. A move that was endorsed by the agency’s chief counsel’s office.
Other banks are not waiting around for permission, with US Bancorp, the 5th largest bank in the country in terms of holdings stating that it was working on a cryptocurrency custody service that would focus on investment managers at financial institutions.
McWilliams stated that it is imperative to allow banks to operate hold crypto stating,
“If we don’t bring this activity inside the banks, it is going to develop outside of the banks.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
