US Eases Crypto Restrictions for Banks
US Regulators Ease Crypto Restrictions
In a significant move for the cryptocurrency industry, US regulators have eased restrictions on banks and digital asset derivatives. The Federal Deposit Insurance Corporation (FDIC) announced on March 28 that banks under its supervision can engage in crypto-related activities without prior approval. This reverses a previous requirement that mandated notification for such activities. The Commodity Futures Trading Commission (CFTC) concurrently announced that digital asset derivatives will be treated no differently than traditional derivatives.
The FDIC's revised guidelines include activities such as:
- Acting as crypto-asset custodians
- Maintaining stablecoin reserves
- Issuing crypto and other digital assets
- Acting as market makers or exchange/redemption agents
- Participating in blockchain-based settlement systems
While the FDIC emphasizes that banks should assess associated risks (market, liquidity, operational, cybersecurity, AML, and consumer protection), this move signals a more accommodating regulatory environment.
Elimination of Reputational Risk
Further supporting this shift, the FDIC removed the "reputational risk" category from bank exams on March 25. This category previously highlighted the potential dangers banks faced when dealing with certain sectors, including cryptocurrency. This removal clears the way for increased bank involvement in the digital asset space.
Digital Asset Derivatives: No Special Treatment
The CFTC's announcement clarifies the treatment of digital asset derivatives. By withdrawing a previous staff advisory, the CFTC ensures these derivatives are treated the same as other derivatives, eliminating regulatory ambiguity in this critical market segment. This change is effective immediately.
Industry Response
This shift in regulatory stance has prompted several responses within the crypto industry. Coinbase, for example, is expanding into futures trading and reportedly exploring the acquisition of Deribit, a crypto derivatives exchange. Kraken, another major US exchange, has similarly pursued expansion in the derivatives market via the acquisition of NinjaTrader.
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