The America Federal Deposit Insurance Corporation (FDIC) has overturned a 2022 policy that required financial institutions to request government approval before engaging in cryptocurrency activities. Notably, this policy reformation is poised to allow financial institutions to interact more freely with the digital assets sector. FDIC Lifts Restrictions on Crypto Banking It is worth mentioning that the FDIC’s latest move removed a rule that has caused many banks to have reservations about engaging with digital asset organizations. For context, the 2022 policy stipulated that banks expected to obtain the corporation’s approval before venturing into any crypto-related business or transactions. However, these approvals were rarely granted, leaving banks in limbo and deterring them from working with digital asset companies. The restriction was part of a wider effort by federal regulators to scrutinize the crypto industry, especially after the sector faced high-profile failures, including the collapse of the global exchange FTX. Meanwhile, concerns over fraud, volatility, and financial stability prompted agencies to take a cautious approach, resulting in banks cutting ties with crypto firms. This led to accusations that regulators were deliberately pushing digital assets out of the traditional financial system. With the FDIC’s new policy, banks can engage in cryptocurrency activities by conducting thorough risk assessments and adhering to existing financial regulations. This shift will encourage more traditional financial institutions to explore blockchain technology and digital assets. In related news, Coinbase exchange filed Freedom of Information Act (FOIA) requests to uncover details about U.S. regulator’s actions against crypto companies. Trump Administration’s Influence on Crypto Policies In line with the recent update from the US security commission, the FDIC, under new leadership, is taking a more crypto-friendly position. This is in agreement with the country’s overreaching regulatory pivots. The OCC also reversed a 2022 directive restricting banks’ crypto involvement. However, FDIC Acting Chairman Travis Hill emphasized balancing innovation with financial stability. Speaking on social media, Bo Hines, the White House’s director of its council of digital assets advisers, called the move a major step toward crypto integration. Implications for Banks and the Crypto Industry As a result of this development, Financial institutions can now more easily engage with cryptocurrency businesses, boosting confidence among banks and investors. The crypto industry sees this as a positive step toward greater collaboration with traditional finance. While challenges remain, the policy shift signals a more adaptive regulatory approach, potentially fostering innovation and stability in the sector. Meanwhile, the Federal Deposit Insurance Corporation (FDIC) has confirmed First Citizens Bank as the new owner of the defunct Silicon Valley Bank (SVB). After making an initial effort to find a buyer, the new owners purchased SVB in a second auction. The post US FDIC Reverses Crypto Banking Policy: Details appeared first on TheCoinrise.com .
