A team of U.S. bank regulators is devising ways in which banks may hold crypto on their balance sheets, provide custody and facilitate client trading.
In an interview with Reuters reported Monday, Jelena McWilliams, chair of the Federal Deposit Insurance Corp. (FDIC), said banks needed to be allowed to get involved with crypto.
“If we don’t bring this activity inside the banks, it is going to develop outside of the banks,” McWilliams said. “The federal regulators won’t be able to regulate it.”
The FDIC is one of the federal banking regulators in the U.S. and one of two entities that provide deposit insurance to federally regulated institutions.
Comments from a top U.S. regulator demonstrate crypto’s prominent rise this year and a rush to regulate and contain particular aspects of the industry as it relates to the traditional finance sector.
Speaking to the Federalist Society in May, McWilliams said her agency wanted to hear from banks about how they are approaching crypto and what role the regulator should play.
A week later, The Office of the Comptroller of the Currency, the Federal Reserve and the FDIC began exploring an interagency policy team to examine the cryptocurrency sector.
“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,” McWilliams said as cited by Reuters.
“At some point in time, we’re going to tackle how and under what circumstances banks can hold them on their balance sheet.”