FDIC to Regulate Cryptocurrency: Banks Explore Digital Currency Space

• An increasing number of banks in the US are exploring the digital currency space due to the growing demand for bitcoin and cryptocurrency services.
• The Federal Deposit Insurance Corporation (FDIC) provides insurance to protect depositors in case of bank failures, and there have been discussions about regulating cryptocurrency custodians.
• As of January 2023, about 52 million Americans have invested in Bitcoin and other crypto assets, with 136 banks planning or already involved in various crypto-related initiatives.

Growing Demand for Cryptocurrency Services

In response to growing consumer demand for bitcoin and other cryptocurrency-related services, an increasing number of banks in the United States under the umbrella of the Federal Deposit Insurance Corporation are exploring the digital currency space. The trend reflects the interlinkage of crypto assets and associated products and services with the regulated financial system.

FDIC’s Role In Regulating Crypto Assets

The Office of Inspector General, an independent office within many US government agencies, published a report on February 17, indicating the growing involvement of banks in the digital assets industry. The report also calls for proper guidelines for lenders under the FDIC mandate, emphasizing the need to ensure that their policies and procedures consider the risks associated with digital assets, especially regarding deposit insurance.

Crypto Custodians & Bank Involvement

Despite not having a direct role in the regulation or oversight of cryptocurrencies, the FDIC provides insurance to protect depositors in case of bank failures, and there have been discussions about the potential for the FDIC to regulate cryptocurrency custodians. Cryptocurrency custodians hold digital assets on behalf of others, similar to how banks hold traditional assets such as cash and securities.

America’s Growing Interest In Crypto Assets

Demand For Crypto-Related Services Grows The OIG report emphasizes that as of January 2023, about 52 million Americans had invested in Bitcoin and other crypto assets; while 136 banks were planning or already involved in various crypto-related initiatives.

Bitcoin’s Market Cap & Record Wins

At time writing Bitcoin has a market cap around $461 billion; while BitStarz Player recently landed a record win worth $ 2,459124!