Banks Face Tough Duties if They Hold Crypto, Say US Agencies

The Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Federal Reserve Board wrote the statement.

The agencies noted that the document does not set any new rules. Instead, it is intended to guide banks considering entry into the crypto market.

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The document, titled Crypto-Asset Safekeeping by Banking Organizations, outlines several key issues that banks must consider. These include understanding how the technology works, managing the risk of losing customer assets, and meeting existing laws on anti-money laundering and customer protection.

The agencies stressed that holding crypto safely takes a lot of effort and resources. Banks must also remember they are responsible for everything their chosen sub-custodians do.

Even when a bank hires an outside firm to hold crypto, as BlackRock has done with Coinbase $5B and Anchorage, the bank still bears the final responsibility. If a sub-custodian is hacked or mishandles the assets, the bank could still face the consequences.

Banks are also advised to create robust audit programs that reflect the specific nature of crypto. These programs should include how cryptographic keys are created, how assets are transferred and settled, and how staff are trained.

If a bank lacks the necessary skills or systems, it should consider hiring outside experts to review and improve its cryptocurrency operations.

Meanwhile, Shenzhen officials warned about fake investment schemes tied to stablecoins and other cryptocurrencies. What did they say? Read the full story.