FDIC Requests Information from FDIC-Supervised Institutions Engaged in Crypto-Related Activities | Practical Law

FDIC Requests Information from FDIC-Supervised Institutions Engaged in Crypto-Related Activities | Practical Law

The Federal Deposit Insurance Corporation (FDIC) issued a financial institution letter requiring FDIC-supervised institutions that engage in crypto-related activities to notify the FDIC of these activities. Based on the information provided, the FDIC will provide institution-specific supervisory feedback.

FDIC Requests Information from FDIC-Supervised Institutions Engaged in Crypto-Related Activities

by Practical Law Finance
Published on 13 Apr 2022 • USA (National/Federal)
The Federal Deposit Insurance Corporation (FDIC) issued a financial institution letter requiring FDIC-supervised institutions that engage in crypto-related activities to notify the FDIC of these activities. Based on the information provided, the FDIC will provide institution-specific supervisory feedback.
On April 7, 2022, the Federal Deposit Insurance Corporation (FDIC) issued Financial Institution Letter 16-2022 (FIL 16-2022), requiring all FDIC-supervised institutions that engage in crypto-related activities to notify the FDIC of these activities. Based on the information provided by the institution, the FDIC will provide institution-specific supervisory feedback. The FDIC issued FIL-16-2022 to address the growing involvement of FDIC-supervised institutions in crypto-related activities, which, according to the FDIC, poses risks to the safety and soundness of FDIC-supervised institutions, as well as raising financial stability and consumer protection concerns.
FIL-16-2022 notes that any FDIC-supervised institution that is already engaged in crypto-related activities should promptly notify the FDIC. Institutions notifying the FDIC are also encouraged to notify their state regulator.
Under FIL-16-2022:
  • FDIC-supervised depository institutions engaged in or positioned to engage in crypto-related activities must promptly notify the FDIC regional director of their crypto-related activity. The notification should describe the activity in detail and provide the institution's proposed timeline for engaging in the activity.
  • The FDIC will then request that the institution provide information necessary to allow the FDIC to assess the activity. The information requested by the FDIC will vary on a case-specific basis depending on the type of crypto-related activity involved.
  • The FDIC will review the notification and information received, request additional information as needed, and consider the following three risks as they relate to the proposed activity:
    • safety and soundness;
    • consumer protection; and
    • financial stability.
  • The FDIC will provide supervisory feedback to the institution.
FIL-16-2022 follows the FDIC's May 2021 request for information (RFI) in which it encouraged input to improve its understanding of industry and consumer interest in digital assets (see Legal Update, FDIC Issues RFI, Federal Regulators Signal Focus on Digital Assets). Additionally, the FDIC has worked with other prudential banking agencies including the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) to attempt to ensure cryptocurrency policy coordination related to banking activities (see Legal Update, Federal Banking Agencies Issue Joint Statement on Crypto-Asset Policy and OCC Issues Interpretive Letter on Bank Cryptocurrency Activities).
This Update is based in part on material provided by Thomson Reuters Regulatory Intelligence (TRRI).