Regulation
Cryptocurrencies Could Benefit From New FDIC Leadership
U.S. financial institutions may soon see improved interactions with digital asset companies under the guidance of the proposed Federal Deposit Insurance Corporation (FDIC).
This change could boost the growth and adoption of the cryptocurrency industry.
FDIC nominee challenges cryptocurrency banking restrictions
Christy Goldsmith Romero, a candidate for FDIC chairman, has suggested that banks could provide services to digital asset companies. Romero made the statement in response to Senator Cynthia Lummis’s question about whether these financial institutions should serve cryptocurrency companies.
“I don’t think it’s the FDIC’s job to tell banks what industries or businesses they should service,” Romero said. declared.
Coinbase Chief Policy Officer Faryar Shirzad stressed the importance of Romero’s statement, referring to The impact of Operation Chokepoint 2.0 on the cryptocurrency sector. However, Shirzad warned that change may not occur unless the White House rescinds its crackdown directive and the candidates commit to visibly reversing the current pressures on the digital asset sector.
“Banking regulators are currently arguing – as the candidate suggests here – that there is no targeted debanking of the industry and that banks are currently free to fund cryptocurrency companies subject to normal internal risk management reviews,” Shirzad declared.
To know more: US Banking Crisis of 2023 Explained: Causes, Impact, and Solutions
Meanwhile, if the FDIC follows Romero’s position, it would mark a significant reversal. Earlier this year, the FDIC, along with the Federal Reserve and the Office of the Comptroller of the Currency, issued a warning on Cryptocurrency risks for banking organizationsThey argued that crypto-centric business models pose significant security and robustness challenges to the banking industry.
“The issuance or holding as a primary crypto-asset issued, stored or transferred on an open, public and/or decentralized network, or similar system, is highly likely to be incompatible with safe and sound banking practices,” they said. added.
This position has influenced many banks to limit or terminate services for cryptocurrency usersErik Voorhees, founder of cryptocurrency exchange Shapeshift, recently complained on social media that fintech firm Revolut had closed his account due to his involvement with cryptocurrencies.
However, cryptocurrency companies are fighting back against these restrictions. Last month, Coinbase filed a lawsuit against the FDIC and the Securities and Exchange Commission (SEC)requesting documents relating to their approach to cryptocurrency regulation.
To know more: How Does Regulation Affect Cryptocurrency Marketing? A Complete Guide
Similarly, the Bank Policy Institute (BPI) has said it supports efforts to repeal the SEC Staff Accounting Bulletin 121 (SAB 121) which prevented banks from providing cryptocurrency custody services.
“Limiting banks’ ability to offer these services leaves customers with few well-regulated and reliable options to safeguard their digital asset portfolios and ultimately exposes them to greater risk,” BPI said. declared.
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