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US banking agencies to step up crypto-asset regulation

By Mensholong Lepcha

01:59, 24 November 2021

Federal Reserve Building, Washington DC, USA
Federal Reserve Building, Washington DC, USA – Photo: Shutterstock

The Federal Reserve System and other US banking regulatory bodies plan to provide clarity on whether certain crypto-assets activities conducted by banking organisations are legally permissible.

In a joint statement, the Federal Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency said they “recognise that the emerging crypto-asset sector presents potential opportunities and risks for banking organisations, their customers, and the overall financial system.”

The agencies said they will look into regulations related to customer purchases and sales of crypto-assets, crypto-asset safekeeping and lending collateralised by cryptocurrencies.

Stablecoins and crypto-lending being looked into

Issuance and distribution of stablecoins, holding of crypto-assets on the balance sheet and cryptocurrency staking are also topics being looked into by the banking agencies.

Separately, the Office of the Comptroller of the Currency (OCC) confirmed that national banks and federal savings associations must demonstrate that they have adequate controls in place before they can engage in certain cryptocurrencies, distributed ledger, and stablecoin activities.

XRP/USD

0.74 Price
+7.950% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.01168

BTC/USD

89,237.75 Price
+0.310% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 106.00

DOGE/USD

0.40 Price
+2.650% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 0.0012872

SOL/USD

216.66 Price
+2.100% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 22:00 (UTC)
Spread 2.2652

The OCC added that banks must receive a non-objection notification from their supervisory office before engaging in certain cryptocurrency-related activities.

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Risk management systems  

“Because many of these technologies and products present novel risks, banks must be able to demonstrate that they have appropriate risk management systems and controls in place to conduct them safely. This will provide assurance that crypto-asset activities taking place inside of the federal regulatory perimeter are being conducted responsibly,” said acting comptroller Michael J Hsu.

On Wednesday, Bitcoin (BTC) was trading 0.71% lower over the past 24 hours at $56,531 in early Asia trade.

Ether (ETH) rose about 3.06% to $4,270 on Wednesday. Blockchain networks Solana’s SOL slipped 0.8% to $218.57 while Cardano’s ADA fell 4.2% to $1.72 in early Asia trade.

Read more : BoA: Stablecoins are now a systematically important asset

Markets in this article

BTC/USD
Bitcoin / USD
89237.75 USD
276.1 +0.310%
ADA/USD
Cardano / USD
0.55939 USD
-0.01441 -2.540%
ADA/USD
Cardano / USD
0.55939 USD
-0.01441 -2.540%
ETH/USD
Ethereum / USD
3152.01 USD
-13.47 -0.430%
SOL/USD
Solana / USD
216.6611 USD
4.4289 +2.100%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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