The FDIC’s lack of clear guidance for digital assets creates uncertainty for financial institutions in determining the appropriate actions to take in adopting and safeguarding the technology, the agency’s Office of Inspector General concluded in a new report. The OIG found that the FDIC has started to develop and implement strategies that address the financial risks posed by cryptoassets. However, the agency has not assessed the significance and potential effects of those risks, and its process for providing supervisory feedback for institutions’ crypto-related activities is unclear, according to the report.
The OIG noted that the FDIC asked some banks to pause, or at least not expand, planned or ongoing crypto-related activities, and to provide additional information about those activities. However, the agency failed to establish an expected timeframe for reviewing information and responding to the institutions that received pause letters. It also failed to describe what constitutes the end of the review process. The report recommended that the FDIC establish a plan with timeframes for assessing risks about crypto-related activities, and that it update and clarify the supervisory feedback process related to its review of those activities.
“Until the FDIC assesses the risks of crypto activities and provides supervised institutions with effective guidance, the FDIC and some FDIC-supervised institutions may not take appropriate actions to address the most significant risks posed by cryptoassets,” the OIG said. The report added that if financial institutions do not receive timely feedback from the FDIC and do not understand what constitutes the end of the review process, “this uncertainty creates risk that the FDIC will be viewed as not being supportive of financial institutions engaging in crypto-related activities.”