July 4, 2022

Volume XII, Number 185

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July 01, 2022

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FDIC Requires Reporting of Crypto-Related Activities

Any Federal Deposit Insurance Corporation (FDIC)-supervised institution that is considering engaging in cryptorelated activity must now notify the FDIC of its intent and provide all necessary information to create a dialogue with the agency about the risks related to such activity.

This requirement follows the FDIC’s issuance of a financial institution letter (FIL) on April 7 to all FDIC-supervised financial institutions (namely, state-chartered banks that are not members of the Federal Reserve System) requiring notification to the agency if the institution is engaged or intends to engage in crypto-related activities. “Crypto-related activities” are defined in the FIL as “acting as crypto-asset custodians; maintaining stable coin reserves; issuing crypto and other digital assets; acting as market makers or exchange or redemption agents; participating in blockchain- and distributed ledger-based settlement or payment systems, including performing node functions; as well as related activities such as finder activities and lending.”

In addition to notifying the FDIC regarding new proposed crypto-related activities, the agency also stated that any institution it supervises that is presently engaged in crypto-related activities should also promptly notify it. Specific information requested by the FDIC in connection with such notifications is set forth in the FIL.

In announcing these requirements, the FDIC noted that crypto-related activities may pose significant safety and soundness and financial stability risks and may also raise consumer protection concerns. In particular, the FDIC noted that credit, liquidity, market, pricing, and operational risks could be created by such activities, and that these issues may, either individually or collectively, present safety and soundness concerns. With respect to safety and soundness concerns, the FDIC stated that there are anti-money laundering and terrorist financing implications inherent in crypto activities. The agency also noted that the structure of crypto assets could create a disruption based on the interconnected nature of certain crypto-related activities, thereby threatening financial stability.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume XII, Number 103
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About this Author

Christina J. Grigorian, Banking legal Specialist, Katten Muchin Law firm
Special Counsel

Christina J. Grigorian counsels clients in all matters related to banks, bank holding companies, and state and foreign-licensed consumer and commercial lenders. Ms. Grigorian provides advice to the firm’s financial institution clients concerning structural and operational issues, including legislative developments impacting such operations, and has worked with companies and individuals in the establishment of de novo entities, including national banks, federal savings banks and state-chartered institutions, as well as state-licensed lenders. She has also counseled clients with respect to...

202-625-3541
Partner

From derivatives products to cryptocurrencies, Dan Davis helps clients navigate ever-changing regulatory requirements. Drawing on his years of experience as General Counsel at the Commodity Futures Trading Commission (CFTC), Dan understands how financial services agencies operate. As an experienced complex civil litigation attorney, Dan can defend clients in any forum.

Regulatory perspective meets business-oriented counsel

Clients trust Dan’s experience to help mitigate risks in the face of investigations and enforcement actions and to assess rules issued by financial...

202-625-3644
Gary DeWaal, Securities Attorney, Katten Law Firm, New York
Special Counsel

Gary DeWaal focuses his practice on financial services regulatory matters. He counsels clients on the application of evolving regulatory requirements to existing businesses and structuring more effective compliance programs, as well as assists in defending and resolving regulatory disciplinary actions and enforcement matters. Gary also advises buy-side and sell-side clients, as well as trading facilities and clearing houses, on the developing laws and regulations related to cryptocurrencies and digital tokens.

Previously, Gary was a senior...

212-940-6558
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