Banking agency to provide guidance on crypto after better understanding the risks- FDIC chief | Techy Kings

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Oct 20 (Reuters) – Banking regulators expect to provide industry guidance to financial institutions on crypto-related activities once the agency better understands the associated risks, the acting chairman of the Federal Deposit Insurance Corp. said.

“We must understand and assess the risks associated with this activity just as we assess the risks associated with any other new activity,” Martin Gruenberg said Thursday during a speech at the Brookings Institution.

Gruenberg also added that a potential future payment system based on the use of stablecoins, which are crypto-assets typically pegged to the US dollar, should complement the Federal Reserve’s upcoming FedNow service, as well as a possible US central bank digital currency.

Stablecoin payments would also be safer if they were based on permissioned blockchains with robust governance and compliance mechanisms, he said.

“A permissionless public blockchain… poses a major challenge in terms of basic supervisory responsibilities for security and robustness, consumer protection and money laundering prevention,” Gruenberg said.

In July, the FDIC urged banks that service cryptocurrency companies to ensure that customers know which of their funds will be insured by the government in the event of a collapse, saying it was concerned that customers could be confused about the safety of their assets.

The FDIC along with the Federal Reserve issued a cease and desist order against crypto lender Voyager Digital, which filed for bankruptcy in July, alleging the company misled customers into believing funds invested on its platform would be guaranteed by the government.

Reporting by Hannah Lang in Washington

Our Standards: Thomson Reuters Trust Principles.

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