The Federal Deposit Insurance Corporation (FDIC) stated in a letter dated March 28 that institutions under its jurisdiction, including banks, are permitted to engage in crypto-related activities without needing prior approval. This update coincides with the Commodity Futures Trading Commission (CFTC) announcing that digital asset derivatives will be treated the same as any other derivatives.
This FDIC letter officially reverses a prior directive established during the previous administration, which mandated that institutions seek consent before participating in crypto-related activities. According to the FDIC, crypto-related activities encompass a range of actions, such as serving as custodians for crypto assets, managing stablecoin reserves, issuing cryptocurrencies and other digital assets, functioning as market makers or exchange agents, and participating in blockchain-based payment systems, among others.
The FDIC emphasized that institutions must assess the risks linked to engaging in such activities, including market and liquidity risks, operational and cybersecurity threats, consumer protection obligations, and anti-money laundering requirements.
Furthermore, on March 25, the FDIC removed the “reputational risk” category from bank examinations, facilitating banks’ ability to engage with digital assets. Reputational risk highlights the perils financial institutions face when dealing with certain sectors.
In another development, the CFTC has clarified that digital asset derivatives will not receive special treatment compared to other derivatives, with changes taking immediate effect. This shift comes alongside a broader regulatory openness for crypto firms, driven by the current administration’s commitment to positioning the country as a leader in the cryptocurrency space.
Crypto companies are adapting their strategies to better navigate this evolving regulatory landscape. For instance, on March 10, Coinbase unveiled plans for round-the-clock trading of Bitcoin and Ether futures. Additionally, the firm is reportedly looking to acquire DeraBit, a crypto derivatives exchange.
Kraken, another cryptocurrency exchange based in the U.S., is also making strides in the derivatives sector; on March 20, it announced its acquisition of NinjaTrader, which will enable it to offer crypto futures and derivatives.