On Monday, May 17, 2021, the Federal Deposit Insurance Corporation (FDIC) issued a request for information (RFI) regarding the digital asset activities involving insured depository institutions (IDIs). Comments on the RFI are due by July 16, 2021.
As the market for digital currencies shows considerable fluctuation, the FDIC, which is the primary federal supervisor for insured state banks, intends to understand the associated risk and compliance management issues of digital asset activities in the banking industry.
The RFI groups digital asset activities into the following categories, soliciting comments on whether additional use cases should be included within this framework:
- Technology solutions, such as token-based systems and distributed ledgers
- Asset-based activities, such as investments, collateral and margin lending
- Liability-based activities, such as bank deposit services and reserves
- Custodial activities, such as providing digital asset safekeeping and related services
- Other activity including market-making and decentralized financing
The RFI also seeks to answer questions whether the existing risk and compliance management framework addresses all the risks for the various digital asset activities. Moreover, are there additional supervisory aspects that should be considered and implemented by the FDIC. Finally, in the aspect of deposit insurance and resolution, the RFI requests comment on whether the FDIC should take steps to ensure that customers can distinguish between insured deposits and uninsured digital asset products.
With the change in presidential administrations, the Office of the Comptroller of the Currency (OCC), Federal Reserve Board and FDIC aim to take a more coordinated approach to regulation of digital assets. This was confirmed before Congress by the Acting Comptroller of the Currency, Michael Hsu, who raised a concern about the OCC’s past fragmented approach towards digital asset activities, emphasizing that a common way must be found to consider how fintechs and payments platforms fit into the banking system.