FDIC to Provide More Clarity for Banks to Hodl Crypto
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The Federal Deposit Insurance Corporation (FDIC) is collaborating with a team of US bank regulators to provide a "roadmap for banks" that want to engage with cryptocurrencies. Jelena McWilliams, FDIC Chairman, told Reuters in an interview that the new recommendations might give financial institutions clearer rules over holding cryptocurrencies in custody or using them as collateral for loans.

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McWilliams also assured that the FDIC "at some point in time" is going to explain "how and under what circumstances banks can hold them [cryptocurrencies] on their balance sheet."

"I think that we need to allow banks in this space, while appropriately managing and mitigating risk. If we do not bring this activity inside the banks, it is going to develop outside of the banks. ... The federal regulators will not be able to regulate it," McWilliams said.

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Currently, it is difficult for regulators to figure out how to allow cryptocurrency as collateral and include it on bank balance sheets, she noted. The comments come after U.S. Bank, an American bank holding company, launched a cryptocurrency custody service for to its Global Fund Services clients.

The Minneapolis-based company said the services are focused on institutional investment managers with private funds in the US or Cayman Islands who would like a "safekeeping solution" for bitcoin and other coins in the foreseeable future.

Earlier in February, Sheila Bair, ex-head of the FDIC, claimed people should avoid investments in bitcoin (EXANTE: Bitcoin) as the cryptocurrency is highly volatile. According to Bair, only wealthy investors should take such a risk.

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