Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency made a joint statement on November 23, 2022. the report includes the oversight of the crypto, and U.S. Bank’s role can play legally in the cryptocurrency market.

What is Cryptocurrency
Many of you may hear about cryptocurrency and the cryptocurrency market. As of today, the crypto market is worth $ 2.45 trillion. Also, 14.873 coins and tokens are circulating in the market. Moreover, 436 exchanges support to exchange, trade, and purchase of cryptocurrencies.
We are not going to describe what are cryptocurrencies are. Many of you have heard or even used cryptocurrencies at least one-time in your life. 86% of Americans say that they have at least heard about cryptocurrencies in their lifetime. Every one-in-four has listened to a lot of cryptocurrencies in the USA. However, nearly 13% of the total population does not become familiar with cryptocurrency.
Moreover, 43% of men aged 18-29 in America have invested or traded cryptocurrency. In the same vein, out of 16% of the total population are somehow engaged with cryptocurrency. You might wonder, out of this 16%, the majority is represented by Asian ex-pats and immigrants living in America or of descent in Asian countries.
Why Cryptocurrency Industry Needed Regulation?
Considering the future opportunities of this trillion-dollar industry, there are still plenty of opportunities to enter and develop in this industry. Especially in the U.K., banks started to find potentials of cryptocurrency field and its impact on the bank system since 2012. Therefore, we believe U.S. banks have to participate more actively in this fortune industry.
When any industry has circulating such an amount of money, strong regulation is needed. If not, the middlemen and brokers can significantly impact small-level traders, holders of cryptocurrencies. Also, strict rules and monitoring are required to control the market manipulation by institutional buyers and investors.
Crypto Road Map to 2022
According to the joint statement, the Federal Reserve, Federal Deposit Insurance Scheme, and Comptroller of the Currency (collectively agencies) have recognized the future potentials of the crypto assets, potential opportunities and risks to the banks and financial institutes, customers, traders, holders, and overall financial system of America.
Hence they have deployed a series of interagency policy sprints focused on crypto assets. This policy sprint is similar to previous tech sprints. However, the team that engaged with sprints includes expertise with different backgrounds. Through these sprints, agencies explored various issues and risks bonded with the crypto market.
Policy Sprints mainly focused on;
- We are developing a common vocabulary using consistent terms regarding the use of crypto assets by banking institutes.
- Identify key risk areas which will affect institutes, financial systems, and customers.
- Critical areas of customer protection compliance, customer due diligence, KYC process.
- Legal fundamentals of the crypto assets and recovery of potential financial damages engaged with the crypto market.
- The application of existing rules and regulations in the banking and finance system to the crypto-assets and critical areas to be amended.
Key concerns of the “Sprint Run” on Cryptocurrencies
According to the agencies’ joint statement, there are some critical areas in banks and other financial institutes engaged in the crypto market. They are;
- Direct investments of the banks and financial institutes
- Crypto backed loans and advances
- Facilitation of customers crypto purchase and selling activities
- Activities regarding crypto payments, including stable coins
- How to enter the banks crypto assets in the year-end financial statements
The main risk involved with the crypto market is a high level of volatility of crypto assets. No one can predict the future value of crypto assets. Also, some coins, even Bitcoin, drop their importance by a considerable percentage due to the court case decision regarding the Mt. Gox bankruptcy. On the other hand, the Metaverse coins seem to grow considerably due to Facebook’s conversion to the virtual reality industry. So, these are some examples to say how volatile the cryptocurrency industry is. In addition, financial rules and regulation changes in countries, the power of institutional buyers, and even iconic profile statements – e.g., Elon Musk- makes a significant impact on the price changes in crypto assets.
Sudden changes in crypto assets make a considerable risk for banks. Since bank tends to lend over crypto assets, a value drop of collateral crypto-asset cause a massive loss to the lending institute.
Summary of the Cryptocurrency Road Map in 2022
As per the joint statement, conclusions made by the combined agencies are below mentioned. These are the areas that banks and financial institutes can impact and engage within the crypto market.
- Crypto-asset safekeeping and traditional custody services
- Ancillary custody services
- Facilitate customers to buying and selling of crypto – assets
- Lending over crypto-assets
- Insurance and distributions of stable coins
- Activities on holding crypto-assets in the balance sheet
At a glance
When we look at the joint statement, we can hope the future of America will show a green light to crypto-based activities since countries like El-Salvador adopted Bitcoin as the country’s official currency already. China and U.K. are also developing their cryptocurrencies for mass use in financial transactions. So, we would like to recommend and suggest moving forward with cryptocurrency and moving with the world. Also, we do not provide financial advising on investing in cryptocurrencies. Just do your research and take your own decision. Sometimes you may be the next lucky millionaire who is made by cryptocurrencies.