The head of the U.S. Federal Deposit Insurance Corporation said Tuesday that the agency is focused on creating “clear guidance” on the intersection between crypto and the American banking world.
Speaking at the Money 20/20 conference in Las Vegas, FDIC chair Jelena McWilliams opened by saying that her job is to “provide clear rules of the road – to allow innovation to flourish, while mitigating risks.”
“If we fail to do this, we risk stifling innovation and forfeiting America’s leadership in developing world-changing technologies,” she continued.
McWilliams went on to highlight the multi-agency, banking-focused work being conducted around crypto, with representatives from the Office of the Comptroller of the Currency and the Federal Reserve also contributing. Acting U.S. comptroller Michael Hsu spoke about the so-called “spring” during a Congressional hearing in May.
“Over the past several months, the FDIC has been engaged with the Federal Reserve and the Office of the Comptroller of the Currency in what some have called a ‘crypto sprint,’ McWilliams remarked Tuesday. “Through this process, the agencies are coordinating policies for how and under what circumstances banks can engage in activities involving crypto assets.”
McWilliams went on to say:
“My objective is to provide clear guidance to the public on how our existing rules and policies apply to crypto assets, what types of activities are permissible for banks to engage in, and what supervisory expectations we have for banks that do engage in such activities. We plan to issue a series of policy statements in the coming months.”
Much of her crypto-focused remarks centered around stablecoins, or digital assets that are pegged in some way to government-issued currencies like the dollar. McWilliams said that “in order to realize the potential benefits stablecoins have to offer, while accounting for potential risks, stablecoins should be subject to well-tailored government oversight.”
“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,” she continued, going on to remark:
“If issuers purport to have reserves available on demand to satisfy withdrawal requests, regulators should have authority to ensure the funds are there, specifically if such issuers are large enough that a stablecoin “run” could result in financial instability. There are other potential risks we must be cognizant of, such as ensuring operational resilience and preventing money laundering. Establishing clear regulatory expectations will be paramount to give this market an opportunity to grow and mature in a responsible manner.”
In follow-up comments to Reuters, McWilliams notably said that “[a]t some point in time, we’re going to tackle how and under what circumstances banks can hold them on their balance sheet.”
That the head of the FDIC is putting stablecoins front and center is perhaps unsurprising, given significant movement within the U.S. government toward tighter oversight of this particular part of the crypto ecosystem. Officials within the Biden administration have been weighing proposals to apply banking regulation to the stablecoin industry.
The U.S. Treasury is expected to publish a report focused on stablecoins, including policy proposals, in the coming days.