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- US banking regulators are developing clearer guidelines for banks that deal with cryptocurrencies.
- Jelena McWilliams, who chairs the FDIC, told Reuters that a roadmap is being developed for financial institutions.
- "If we don't bring this activity inside the banks, it is going to develop outside of the banks," she said.
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US banking regulators are developing clearer guidelines for banks that deal with cryptocurrencies as the rapidly growing asset class makes its way into mainstream adoption.
Jelena McWilliams, chair of the Federal Deposit Insurance Corporation, told Reuters Monday that a roadmap is being developed for financial institutions, including clearer rules on holding cryptocurrencies in custody.
"I think that we need to allow banks in this space, while appropriately managing and mitigating risk," she told Reuters. "If we don't bring this activity inside the banks, it is going to develop outside of the banks. … The federal regulators won't be able to regulate it."
On a conference panel earlier, McWilliams also said she wants regulators to lay out a way ahead for banks to use crypto assets as a form of collateral and how banks can hold them on their balance sheets.
Regulators in the US so far have issued no definitive stance on how banks should and could hold cryptocurrencies.
In May, the Office of the Comptroller of the Currency, the Federal Reserve, and the FDIC discussed the formation of an "interagency sprint team" that will focus on crypto regulation. Meanwhile, the Fed is working on a paper that covers stablecoins, while the White House has formed a working group that is looking at cryptocurrency rules as well.
But recent reporting by Politico revealed that a top regulator during the Trump administration allowed banks in January to trade cryptocurrencies on behalf of clients. The decision, which is being reviewed by OCC acting Comptroller Michael Hsu, wasn't made public until October 22.
Despite the lack of regulatory clarity, major banks in the US have not shied away from offering services related to digital assets.
US Bank in October launched a crypto custody service for fund managers amid growing demand. JPMorgan Chase in July allowed all its wealth management clients access to crypto funds. Citigroup, a month after, announced it is considering trading bitcoin futures, following Goldman Sachs's lead in May.
Cryptocurrencies, whose collective market cap ballooned to $2.6 trillion at one point, have seen rapid growth in the past years, despite wild price swings and regulatory clampdowns. Bank of America analysts recently said the space is simply "too large to ignore."