FDIC Confirms Banks Can Dabble in Bitcoin and Cryptocurrency Without Needing Prior Approval

Bitcoin Magazine

FDIC Declares That Banks Can Engage in Bitcoin and Crypto Without Previous Authorization

The Federal Deposit Insurance Corporation (FDIC) has recently released new guidance that permits the banks under its supervision to actively participate in bitcoin and cryptocurrency operations without needing prior approval. This marks a significant shift from the contentious policy enforced during the Biden administration.

In an official statement issued on March 28, the FDIC announced that banks are now authorized to offer crypto-related services, including custody and trading, provided they implement appropriate risk management protocols. The organization also plans to update outdated regulations to align with current cryptocurrency practices.

This change in policy is outlined in a new Financial Institution Letter that nullifies previous 2022 regulations which mandated banks to obtain FDIC consent before engaging with bitcoin and other crypto assets. This earlier requirement had caused dissatisfaction within the banking sector.

By eliminating this prerequisite, the FDIC empowers its banking institutions to explore the burgeoning cryptocurrency landscape with greater freedom. Nevertheless, specific permissions will still require coordination among relevant agencies.

Travis Hill, the Acting FDIC Chairman, characterized this decision as “one of several steps” towards establishing a more crypto-friendly framework that prioritizes security. He remarked, “The FDIC is moving forward beyond the ineffective strategies of the past three years.” The agency anticipates providing further guidance as it collaborates with the President’s Working Group on digital assets.

Recently, several major banks have begun to offer bitcoin and cryptocurrency services despite the uncertainty surrounding existing regulations. Granting regulatory clarity will pave the way for a larger number of banks to participate in this growing market.

This article FDIC Declares That Banks Can Engage in Bitcoin and Crypto Without Previous Authorization first appeared on Bitcoin Magazine and is authored by Vivek Sen Bitcoin.