Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams announced at the October 25 Money 20/20 conference that the FDIC is currently working with the Federal Reserve and Office of the Comptroller of the Currency to develop a series of policy statements aimed at addressing engagement in activities involving cryptocurrency assets. Those policy statements are expected over the coming months.
In particular, McWilliams is focused on “provid[ing] clear guidance to the public on how [the FDIC’s] existing rules and policies apply to crypto assets, what types of activities are permissible for banks to engage in, and what supervisory expectations [the FDIC has] for banks that do engage in such activities.”
McWilliams — who acknowledged the need to ensure that American business is not left behind in the global digital-currency market — extoled the benefits that cryptocurrencies have introduced to the marketplace and the importance of allowing innovation in this space.
At the same time, the FDIC Chairman cautioned against the risks posed by an unregulated crypto market, particularly as it relates to stablecoins (i.e., cryptocurrencies that are backed 1:1 by some other asset like fiat currency, a commodity, or other cryptocurrency). Specifically, McWilliams opined that “oversight should rest on the foundation that stablecoins issued from outside the banking sector are truly backed 1:1 by safe, highly liquid assets” to prevent potential financial instability resulting from a “run” on stablecoins, to ensure operational resilience, and to prevent money laundering.
In all, the chairman’s remarks suggest that while the FDIC is intent on asserting its regulatory power, it intends to do so with a focus (at least in part) on promoting technological innovation and protecting American exceptionalism in the global economy.