A Trio of Fed Agencies Have Issued a Joint Regulatory Roadmap for Cryptos in 2022

Various federal agencies are jockeying for prime cryptocurrency regulatory positioning in advance of action from Congress (at some point theoretically).

Last Tuesday, three U.S. federal agencies issued an unexpected joint document containing comments and an outline for regulatory cryptocurrency priorities in 2022. The unified statement came from the following agencies: the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency.

"As supervised institutions seek to engage in crypto-asset-related activities, it is important that the agencies provide coordinated and timely clarity where appropriate to promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules," the statement noted.

This joint roadmap is a crypto regulatory first

This public announcement is significant in that it marks the first official, cross-agency statement of regulatory intent regarding cryptocurrency assets and the banking industry within the U.S. Over the past few months, these regulatory bodies coordinated on a series of "policy sprints" focusing on crypto assets. The intent of these "sprints" was to assemble the correct experts from each regulatory team to conduct preliminary analysis on a range of crypto topics.

Based on this early-stage work by staffers, the agencies listed several areas where they believe additional public disclosure is required. Together they outlined the following crypto-asset roadmap:

Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations related to:

• Crypto-asset safekeeping and traditional custody services.
• Ancillary custody services.
• Facilitation of customer purchases and sales of crypto-assets.
• Loans collateralized by crypto-assets.
• Issuance and distribution of stablecoins.
• Activities involving the holding of crypto-assets on-balance sheet.
  

The announcement went on to state that beyond the articulated roadmap they would continue to monitor the crypto-asset class and intervene as market conditions change. It also stated that these bank regulators would partner with other "relevant authorities" as needed.

Relevant authorities are subtly marking crypto territories

You may recall last month when the Presidential Work Group on stablecoins issued its initial report, which said virtually nothing and took no action, choosing instead to kick the regulatory issue over to Congress. Since then the SEC and Fed have come out with a series of opinion papers and policy statements. The intent of those public documents appears to be rhetorical jockeying that will ensure prime positioning for regulatory boundaries, once Congress is finally ready to act.

Balkanized crypto oversight seems inevitable

Don't be surprised if crypto regulations in the U.S. become fragmented. It's possible the SEC could oversee crypto exchanges, crypto derivatives, and exchange-traded funds, while the Fed governs crypto services offered by banks, stablecoins, and token custody. And that's just for starters. The Treasury Department, IRS, Commodity Futures Trading Commission, Financial Stability Oversight Council -- and perhaps others -- will likely want to have a say as well.

It's safe to say we shouldn't hold our breath waiting on additional regulatory guidance from Congress anytime soon.