FDIC issues request for information on digital assets at US banks

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The Federal Deposit Insurance Corporation (FDIC) has issued a request for information, soliciting views on the possible use cases for digital currency at U.S. banks.

The body, which protects bank deposits in the U.S. via a compulsory insurance scheme for financial institutions, said it was looking for information on “current and potential digital asset use cases” for insured institutions in the country.

The request comes at a time of increasing interest in digital assets from mainstream financial institutions and regulators.

In the request paper, the FDIC said it was particularly interested in use cases around settlements, payments, custody, investment, and reserves denominated in digital assets.

“The Federal Deposit Insurance Corporation (FDIC) is gathering information and soliciting comments from interested parties regarding insured depository institutions’ (IDIs’) current and potential activities related to digital assets. The FDIC is interested in receiving input on current and potential digital asset use cases involving IDIs and their affiliates.”

“The FDIC recognizes that there are novel and unique considerations related to digital assets, and this RFI is intended to help inform the FDIC’s understanding in this area. The FDIC is seeking input on current and potential use cases involving IDIs (insured deposit institutions) and their affiliates and risk and compliance management in conducting such activities.”

The consultation paper asks broad questions of respondents, such as “Are there any unique aspects of digital asset activities that the FDIC should take into account from a supervisory perspective?”, in a bid to solicit insights from various stakeholders.

The RFI document goes on to enquire about risk and compliance management, including requests for information on the suitability of existing compliance frameworks, as well as questions on supervision, and the role deposit insurance could play in underwriting any risks involved in increasing use of digital assets.

The document also asks for information on how banks and other insured institutions are already using digital assets, as well as any future plans for engaging with digital assets currently under consideration.

FDIC Chairman Jelena McWilliams said the request for information would help the corporation identify the role of banks in the future, and their interactions with digital assets as they become ever more central to mainstream financial services.

“At the FDIC, we are laying the foundation for the next chapter of banking by ensuring we have a regulatory framework that allows responsible innovation to flourish. Digital assets is one area in which we have seen rapid expansion and innovation in recent years. This RFI gives us an opportunity to gain additional insight into the market, and what role banks might play in the future.

The request for information paper also asks respondents for their thoughts on “technology solutions” powered by digital assets, as well as asset-based and liability-based activities, custodial activities and other applications of the digital assets in practice.

The move comes as the latest sign of a regulatory agency showing interest in digital currency and other digital assets, at a time when mainstream banks are becoming increasingly engaged with the sector and emerging technologies in the space.

It follows on from the FDIC’s drive to recruit legal counsel with FinTech expertise as of the end of last year, indicating the direction of travel intended by the corporation.

The request for information is expected to run until July 16, 2021, and is open for contributions from all interested parties.

Similar steps have been taken at the Federal Reserve, which issued its own ‘early-stage guidance’ for ‘novel institutions’ who may be hoping to access its services, specifically targeting institutions dealing in digital assets.

See also: SEC Commissioner Hester Peirce discusses “Blockchain Policy Matters” with Bitcoin Association’s Jimmy Nguyen