US Regulators Making “Policy Sprints” For Unified Crypto-Asset Approach
A coalition of US banking regulators released a joint statement yesterday regarding a “Crypto-Asset Policy Sprint Initiative”. The consortium consists of the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. The report underscores the coalition’s intention to provide greater clarity on crypto-related activities conducted by financial institutions.
Crypto-Asset “Policy Sprint” Initiative
The joint statement summarises a series of interagency “policy sprints” that have been carried out regarding digital assets. Similar to tech sprints, members of staff of the partnering agencies conducted preliminary analysis on the issues relating to crypto and banking. The intended aim is to create a roadmap for planned future work.
At its core, the regulators want to specify the role traditional banks play in the cryptocurrency sector in 2022. The plan is to clarify the types of crypto-related activities that banks can interact with.
- Holding crypto assets on their balance sheets.
- Issuing stablecoins.
- Facilitating crypto trading for customers.
Officials at the agencies have been working to determine the dangers banks face when engaging in crypto activities. The team also studied the possibility of revising existing regulations to provide public clarity.
The agencies intend to continuously assess the application of bank capital and liquidity criteria for crypto activities by US banks. They will also continue to work with the Basel Banking Committee on banking supervision for the consultation process.
The agencies will look to monitor digital-asset developments and address further issues as the market evolves. It will also engage and coordinate with other relevant authorities, as needed, on challenges originating from crypto-asset operations.
Regulatory Uncertainty Forcing US Businesses Abroad
The unsavory stance of US regulators towards the crypto industry has led to more US-owned companies heading abroad. This was a sentiment shared by Mark Cuban, the outspoken owner of Basketball club Dallas Mavericks. He made this statement courtside in a conversation with reporters at Sunday’s NBA game between his team and La Clippers.
The club owner spoke about honoring the retired legendary basketballer Dirk Norwitki through the issuance of NFTs. When questioned about the recent renaming of the Staples center to Crypto.com, he became effusive with his praise for the industry.
“These crypto companies that you don’t know and haven’t heard of before actually have phenomenal businesses. They’re global. The only problem is unlike the early days of the Internet where they’re all US-based, because of the uncertainty with crypto regulation here, you’ve got some of these companies based outside of the United States run by Americans.”
Hong-kong based crypto giants Crypto.com secured a deal to rename the iconic Los Angeles arena. The move, like the FTX partnerships, shows growing support for the crypto industry from sporting institutions.
US regulators’ inability to provide a clear operational framework for the space has seen more US-owned companies head abroad. These firms have all migrated to countries like Singapore and others with more favorable regulations for their development.
As a result, instead of leading the charge for the adoption of the new technology, the US is beginning to play catch-up. Unlike with the internet boom of the 90s, as highlighted by Mark Cuban.
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Renewed Regulatory Drive From Politicians
US regulators are now trying desperately to change the lack of regulation in the crypto industry. Despite the SEC claiming the space should be regulated, it has even failed to add crypto to its regulatory agenda.
However, US politicians are increasingly taking a different approach to crypto. From members of Congress to governors and mayors, politicians in the US have all shown support for crypto. Their support has led to the creation of caucuses and coalitions of bipartisan support. It also sees them regularly calling on the government to create regulations and reap the benefits of the industry while reducing its risks.
The Biden administration also believes federal oversight is needed for stablecoins, a vital bridge for crypto adoption. This has placed the onus on Congress to create the required operational framework. The changing attitudes of politicians towards crypto from politicians may be pushing regulators too. This, in the long run, could bring more proactiveness and prevent the US from being left behind.
Do you see the US catching up with other countries when regulations are provided for the crypto space? Let us know in the comments below.