US FDIC seeks insight on banks’ role in cryptocurrency markets

The United States Federal Deposit Insurance Corporation is looking for information and public comments on banks' cryptocurrency-related activities.

The FDIC is the major provider of deposit insurance to U.S. commercial and savings banks, originally created to address bank runs during the Great Depression. 

On Monday, the FDIC officially announced a request for public input to get more information on the industry and consumers’ interests in the market as well as the role of banks in the digital asset ecosystem.

“Banks are increasingly exploring several roles in the emerging digital asset ecosystem, such as being custodians, reserve holders, issuers, and exchange or redemption agents; performing node functions; and holding digital asset issuers’ money deposits,” the FDIC stated.

The corporation is particularly looking to improve its understanding of digital asset use cases in financial markets and intermediation, as well as in settlement and payment systems. The FDIC is also seeking input on the risk and compliance management of insured depository institutions and their affiliates in conducting digital asset-related activities.

FDIC Chairman Jelena McWilliams noted that the public input will help the agency to better understand the market in terms of regulations. 

“At the FDIC, we are laying the foundation for the next chapter of banking by ensuring we have a regulatory framework that allows responsible innovation to flourish. This RFI gives us an opportunity to gain additional insight into the market, and what role banks might play in the future,” McWilliams stated.

The agency’s interest in digital asset use cases for financial institutions comes as U.S. banks actively move into the crypto industry. In early May, investment bank Goldman Sachs launched a cryptocurrency trading desk, allowing institutional partners to trade derivatives products. Previously, Morgan Stanley added Bitcoin (BTC) exposure to 12 investment funds after announcing plans to offer crypto services to wealthy clients.