U.S. banks must seek regulatory permission before engaging in certain crypto activities -regulator

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WASHINGTON, Nov 23 (Reuters) – U.S. banks must seek and acquire written permission from their financial institution supervisors before engaging in certain activities involving cryptocurrency, a serious regulator mentioned on Tuesday.

The Office of the Comptroller of the Currency mentioned banks must have the ability to reveal they’ve applicable threat administration instruments before taking over activities like offering custody companies for patrons’ crypto holdings.

“Because many of those applied sciences and merchandise current novel dangers, banks must have the ability to reveal that they’ve applicable threat administration methods and controls in place to conduct them safely,” mentioned appearing Comptroller Michael Hsu in an announcement.

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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,” without first notifying their bank supervisors of their intention to engage in that activity.

Supervisors will then review the bank’s risk management tools and systems, and allow the activity only if banks demonstrate they can do so in a safe and sound manner.

A separate joint statement from the Federal Reserve, Federal Deposit Insurance Corporation and the OCC issued on Tuesday said banking regulators intend to clarify in 2022 what role traditional banks can legally play in the cryptocurrency market. L1N2SE1RJ

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Reporting by Pete Schroeder; Editing by Dan Grebler

Representations of Bitcoin and other cryptocurrencies on a screen showing binary codes are seen through a magnifying glass in this illustration picture taken September 27, 2021. REUTERS/Florence Lo/Illustration

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