Despite regulatory uncertainty surrounding the cryptocurrency industry in the United States, 136 banks in the country are exploring crypto-asset-based services.
A large number of US banks have already entered the cryptocurrency industry or have plans to do so in the near future. This was revealed by a recent report study published by the United States Office of the Inspector General (OIG), attached to the Department of the Treasury.
Titled “Top Management and Performance Challenges Facing the Federal Deposit Insurance Corporation,” the study examines the potential challenges and risks facing the Federal Deposit Insurance Corporation (FDIC) with the rise of new trends and technologies, such as cryptocurrencies.
Still, OIG also acknowledges that the adoption of cryptoassets in the United States has seen exponential growth in recent years, as has the relationship between banks and cryptoassets. Currently, it is estimated that some 52 million people in the country own cryptocurrenciesWhile 136 commercial and investment banks are exploring different related services to these digital assets.
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Why are US banks moving towards cryptocurrencies?
Several major US banks, including JP Morgan, BNY Mellon and Goldman Sachs, have pointed out the need to meet the growing demands of their clients and investors, who are increasingly interested in cryptocurrencies and digital assets.
Faced with this constant and growing demand for crypto assets, banks have begun to explore cryptocurrencies and digital assets in order to diversify their services and offer new innovative and cutting-edge products that allow them to maintain their relationship with their clients.
The government agency noted that most U.S. banks, insured by the FDIC, are offering their customers and users Cryptocurrency custody and deposit services, Cryptoasset exchange and management, access to loans, issuing crypto cards, among other services. Most banks have been collaborating with third-party entities to be able to offer these services to their clients.
Joe Biden's executive order for the crypto industry
Although the crypto industry lacks clear rules in the United States, the OIG notes that the executive order which the country's president signed in March of last year with a view to regulating cryptocurrencies promotes the development and technological innovation of this new sector.
In this order, Joe Biden expressed his intention to create a regulatory framework for cryptoassets in collaboration with its regulatory agencies.
The country's president acknowledged the potential of cryptocurrencies to transform and optimize the financial system, boost inclusion and accelerate cross-border payments, while also pointing to the need to monitor their development to ensure a healthy and responsible market.
On the other hand, despite the fact that regulators such as the Securities and Exchange Commission (SEC) consider cryptocurrencies a threat to financial stability, the Federal Reserve Bank of the United States (FED), the country's central bank, has recently shown itself neutral on the crypto industry, to the point of allowing commercial banks in the country to offer cryptocurrency and digital asset services to its customers and users.
Recommendations of the OIG
The OIG report points out some risks related to the adoption of cryptoassets and at the same time urges the FDIC to work in a coordinated manner with other US regulators to create an appropriate and coherent legal framework that allows manage industry threats and take advantage of the potential benefits it offers, as well as their underlying technologies.
One of the biggest fears of the agencies regarding cryptocurrencies is the volatility of prices in the market and that this fluctuation ends up affecting the stability of the financial system. The OIG also spoke about the possibility of money laundering with crypto assets.
In the definition of digital assets, the IGO includes cryptocurrencies such as Bitcoin, as well as stablecoins, tokens and central bank digital currencies (CBDCs).
Continue reading: US Federal Reserve Allows Commercial Banks to Offer Crypto Services
