InfoBytes Blog
Fed urges banks to assess legality of crypto activities
On August 16, the Federal Reserve Board issued supervisory letter SR 22-6 recommending steps that Fed-supervised banking organizations engaging or seeking to engage in crypto-asset-related activities should take. The Fed stressed that organizations must assess whether such activities are legally permissible and determine whether any regulatory filings are required under the federal banking laws. Organizations should also notify the regulator and “have in place adequate systems, risk management, and controls to conduct such activities in a safe and sound manner” prior to commencing such activities. Risk management controls should cover, among other things, “operational risk (for example, the risks of new, evolving technologies; the risk of hacking, fraud, and theft; and the risk of third-party relationships), financial risk, legal risk, compliance risk (including, but not limited to, compliance with the Bank Secrecy Act, anti-money laundering requirements, and sanctions requirements), and any other risk necessary to ensure the activities are conducted in a manner that is consistent with safe and sound banking and in compliance with applicable laws, including applicable consumer protection statutes and regulations,” the supervisory letter explained, adding that state member banks are also encouraged to contact their state regulator before engaging in any crypto-asset-related activity. Organizations already engaged in crypto activities should contact the Fed “promptly” if they have not already done so, the agency said, noting that supervisory staff will provide any relevant supervisory feedback in a timely manner.
The supervisory letter follows an interagency statement released last November by the Fed, OCC, and FDIC (covered by InfoBytes here), which announced the regulators’ intention to provide greater clarity on whether certain crypto-asset-related activities conducted by banking organizations are legally permissible.