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U.S. banks should search regulatory permission earlier than partaking in sure crypto actions: regulator

The Workplace of the Comptroller of the Forex stated banks should be capable to reveal they’ve applicable danger administration instruments earlier than taking up actions like offering custody companies for patrons’ crypto holdings.

U.S. banks should search and procure written permission from their financial institution supervisors earlier than partaking in sure actions involving cryptocurrency, a serious regulator stated on Tuesday.

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The Workplace of the Comptroller of the Forex stated banks should be capable to reveal they’ve applicable danger administration instruments earlier than taking up actions like offering custody companies for patrons’ crypto holdings.

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“As a result of many of those applied sciences and merchandise current novel dangers, banks should be capable to reveal that they’ve applicable danger administration programs and controls in place to conduct them safely,” said acting Comptroller Michael Hsu in a statement.

The new stance from the regulator places a higher bar on banks considering some crypto activities, after the agency under former President Donald Trump cleared the way for banks to engage in some crypto work.

Under the new interpretive letter, banks are not allowed to engage in several crypto-related activities, such as providing custody for crypto assets and using dollar deposits and reserves to back “stablecoins,” with out first notifying their financial institution supervisors of their intention to interact in that exercise.

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Supervisors will then evaluation the financial institution’s danger administration instruments and programs, and permit the exercise provided that banks reveal they’ll accomplish that in a secure and sound method.

A separate joint assertion from the Federal Reserve, Federal Deposit Insurance coverage Company and the OCC issued on Tuesday stated banking regulators intend to make clear in 2022 what position conventional banks can legally play within the cryptocurrency market.

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