In a supervisory letter issued today, the Federal Reserve said that Fed-supervised banks seeking to engage in activities related to cryptocurrency and other digital assets must first assess whether such activities are legally permissible and determine whether any regulatory filings are required. The letter also stated that banks should notify the Fed prior to engaging in crypto-asset-related activities.
The supervisory letter is similar to guidance previously issued by the OCC and FDIC; in all cases, the agencies require banks to notify regulators before engaging in any kind of digital asset activity, including custody activities. The three agencies released a joint statement late last year in which they pledged to provide greater guidance on the issue in 2022.
The Fed noted in its letter that the crypto-asset sector presents opportunities for banks but comes with many potential hazards, including cybersecurity risks and financial stability risks. “A supervised banking organization should, prior to engaging in these activities, have in place adequate systems, risk management and controls to conduct such activities in a safe and sound manner and consistent with all applicable laws, including applicable consumer protection statutes and regulations,” the letter stated. Banks already engaged in crypto activities should contact the Fed “promptly” if they have not already done so, the agency said.
Fed staff “will provide relevant supervisory feedback, as appropriate, in a timely manner.” The Fed also encouraged state member banks to contact state regulators before engaging in any crypto-asset-related activity.