TL; DR Breakdown
- OCC issues warning to banks regarding crypto investments
- Banks must consult with a supervisory body
- IOSCO wants to treat stablecoins like cash
With cryptocurrencies breaking into mainstream attention, there has constantly been a need to regulate them. This is because the assets are there for the taking, and without regulations, traders could suffer losses. This is why the Office of the Comptroller of the Currency sent out a memo to financial institutions regarding digital assets today. According to the memo, OCC wants financial service providers to ensure maximum control before dabbling in crypto-related activities.
OCC says banks must consult with a supervisory body
In the letter sent by Hsu Michael, the current Acting Comptroller, he reminded financial institutions to ensure safety and soundness. He went further by telling them that dealing in crypto-related activities should be something they should do safely. This reason for the statement was that most of the assets in the market present a degree of risk.
With this, Hsu wants the bank to have a measure of security and risk management system that will help them rule out maximum damage. According to the letter, any bank that decides to carry out a crypto-related activity must notify a supervisory body before such transactions are carried out. In turn, the body will be able to a certain if the financial institution can carry out the transactions or not. This means that banks now know where things stand regarding regulation on carrying out crypto transactions.
IOSCO aims to treat stablecoins like cash
The recent letter from the OCC carries the same content that regulators worldwide have been conveying to banks in their respective countries. A new regulation from IOSCO noted that banks must address stablecoins in the same manner as the traditional method of payments. In his statement, Ashley Adler, the head of IOSCO, mentioned that the said report shows clear guidance regarding how banks should treat stablecoins in the financial sector. It also enlists the conditions that they must satisfy and maintain to hold on to their integrity.
Another report from the Bank for International Settlements mentioned that banks should set aside enough capital to help them mortgage losses that might be incurred through holding digital assets. Asides from this, there has been a call from regulators worldwide for the need to regulate stablecoins and other assets in the crypto market. This will help regulators rid the crypto sector of malicious actors lurking in the dark of the market to swindle and scam traders off their legitimate assets.