BREAKING: US Regulators Explore Process for Banks to Hold Crypto
Reuters has reported that “U.S. officials are looking to provide a clearer path for banks and their clients that are looking to hold cryptocurrencies, in order to keep control over the fast-developing asset.” Jelena McWilliams, Chair of the FDIC, told Reuters that a team “of U.S. bank regulators is trying to provide a roadmap for banks to engage with crypto assets.”
According to McWilliams, this would include clearer rules over custody of crypto, using crypto as collateral for loans, or even holding them on their balance sheet like traditional assets. She said: “I think that we need to allow banks in this space, while appropriately managing and mitigating risk.”
However, her comments were not the laser eyed type you may be thinking. She went on to clarify that it was more about banks being able to exercise some regulatory control over crypto assets: “if we don’t bring this activity inside the banks, it is going to develop outside of the banks. … The federal regulators won’t be able to regulate it.”
There hasn’t been cohesion between the different US financial authorities when it comes to crypto, such as the FDIC, Federal reserve, and Office of Comptroller of the Currency, and of course the SEC and CTFC…a lot of moving parts. Since 2020, banks have had the ability to custody crypto, and so these comments do indicate it is more about bringing crypto to banks in a way more involved than just custody.
She also mentioned that her goal is to provide a path for banks to “use crypto assets”, this could be integrating crypto for payments and settlements, something many have been clamoring for in light of the very archaic SWIFT system used by and between banks today.
Maybe the biggest quote from McWilliams was her acknowledgement of banks holding crypto on the balance sheet: “At some point in time, we’re going to tackle how and under what circumstances banks can hold them on their balance sheet.” She described how the volatility can be an issue with allocating crypto on a balance sheet, but she appears to understand that at some point, banks will have no choice but to hold crypto assets.
When large U.S. banks are able to hold #bitcoin on their balance sheets, everyone will want to buy it, no one will need to sell it, and you won't be able to afford it.https://t.co/x4NfSt00m4
— Michael Saylor?? (@saylor) October 26, 2021
If banks really did go all in on Bitcoin collectively, they theoretically would be able to afford buying up almost all of the available supply. This means that the Bitcoin you own, would be worth an astronomical amount. What is interesting is that she mentioned “crypto assets” over and over, rather than just Bitcoin, so banks may be looking at Layer 1 protocols as stores of values for a balance sheet too.
One thing is clear, if the banks do start buying for their balance sheet, the potential market cap of crypto is unfathomable, and will surely surpass Gold, which is what many banks hold today. This is why holding protocols with long-term value is crucial at this time. The banks haven’t even got in yet, but you have. It would be foolish to be short-sighted in light of this news.
The post BREAKING: US Regulators Explore Process for Banks to Hold Crypto appeared first on CryptosRus.
Text source: CryptosRus
