US banks require permission before engaging in certain crypto activities: Regulator

The new stance places a higher sanctions on US banks in view of some crypto activity (Representational)

Washington:

US banks must seek and obtain written permission from their bank supervisors before engaging in certain cryptocurrency-related activities, a major regulator said on Tuesday.

The Office of the Comptroller of the Currency said that before undertaking activities such as providing custody services for customers’ crypto holdings, banks must be able to demonstrate that they have appropriate risk management tools.

Acting Controller Michael Hsu said in a statement, “As many of these technologies and products present new risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to operate safely.” Huh.”

The regulator’s new stance places a higher ban on banks considering certain crypto activities, after the agency led by former President Donald Trump cleared the way for banks to engage in some crypto work.

Under the new explanatory paper, banks are not allowed to engage in a number of crypto-related activities, such as providing custody for crypto assets and using dollar deposits and reserves to back “stablecoins”, previously held in their own hands. without informing the bank supervisors of the intention to engage. that activity.

Supervisors will then review the bank’s risk management tools and systems, and allow activity only if banks demonstrate that they can do so in a safe and sound manner.

The Federal Reserve, the Federal Deposit Insurance Corporation and the OCC said in a separate joint statement issued Tuesday that banking regulators want to clarify in 2022 what role traditional banks can legally play in the cryptocurrency market.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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