Three major U.S. banking regulators, including the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC), issued a joint statement on Monday to remind banks that they must follow some certain rules if they plan to hold crypto for their customers.
However, the agencies clarified that they are not creating new regulations but wish to point out the dangers involved in crypto custody. According to the regulators, banks must have strong systems in place to manage these risks. They should plan ahead, check their safety measures, and be ready to fix problems quickly.
“A banking organization that is contemplating providing safekeeping for crypto-assets should consider the evolving nature of the crypto-asset market,” the statement said.
In addition, banks may offer safekeeping in two ways: fiduciary or non-fiduciary. In fiduciary safekeeping, the bank has legal authority to act on behalf of the customer, like a trustee, will executor, or investment advisor. In this case, banks must follow specific federal rules under 12 CFR 9 or 150, as well as any state laws or agreements that apply.
If banks are not acting as fiduciaries, they still must protect the assets with strong systems to guard against hacking, system failures, or the loss of important information like private keys. The agencies said that any bank looking to offer this service must build a solid risk-management framework and update it as the crypto market changes.
The agencies explained that the crypto world changes fast, and banks need to keep up. They added that any bank offering crypto storage must follow the law and do everything in a safe and sound way, just like with other banking services.
Over the recent months, the regulators have been issuing several of these updates to guide banks in the crypto space. In May, OCC confirmed that banks are now allowed to buy and sell crypto for themselves. The FDIC also changed its approach, saying that banks do not need to get permission before starting crypto activities.
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