US bank regulators are developing a ‘roadmap’ to allow banks to access cryptocurrencies, according to a report from Reuters.
Jelena McWilliams, chair of the Federal Deposit Insurance Corporation, said that the intention of the interagency group is to “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”.
This would pave the way for banks to allow customer trading, use for collateral or potentially even hold them on the books akin to traditional assets.
Speaking at a financial technology conference, McWilliams said of crypto “we need to allow banks in this space, while appropriately managing and mitigating risk.
“If we don’t bring this activity inside the banks, it is going to develop outside of the banks. …The federal regulators won’t be able to regulate it.”
Regulation for the cryptocurrency sector has been confused up to this point. The United States Securities and Exchange Commission (SEC) has changed its tack throughout the year.
SEC chairman, Gary Gensler, chose to leave all crypto regulations off the SEC policy agenda for 2021. However, as reported earlier today, Gensler has pushed for the SEC to provide regulation on stablecoins.
Putting a stop to this complicated regulatory approach will likely be the logic behind McWilliams’ announcement. Banks have already started to enter this territory despite lacking regulatory clarity.
US Bank, the fifth-largest retail bank in the US, launched a Bitcoin custody service earlier this month. This was an early sign that retail investors were seriously considering moving into the decentralised finance space.
“At some point in time, we’re going to tackle how and under what circumstances banks can hold [crypto assets] on their balance sheet”, McWilliams said.