Crypto vs fiat conflict is about to end? All those conventional or traditional banks that were opposing crypto are now working on ways to hold the bitcoin. Eventually, BTC holding could be used for client trading, as collateral for loans, or held as assets in their balance sheets. The FDIC chairman (Jelena McWilliams) said, “I think that we need to allow banks in this space”.
Jelena McWilliams
FDIC chair Jelena McWilliams told Reuters in an interview on October 26 that a team of U.S. bank regulators is working on a more precise set of rules for banks interested in engaging with Bitcoin and cryptocurrency. That would clarify how U.S. banks could hold BTC in custody to facilitate client trading.
“I think that we need to allow banks in this space, while appropriately managing and mitigating risk,” McWilliams said. “If we don’t bring this activity inside the banks, it is going to develop outside of the banks…The federal regulators won’t be able to regulate it.”
Federal Deposit Insurance Corporation
The FDIC is one of the three leading U.S. bank regulators, including the FED and OCC. In May, Fed vice chair of supervision Randal Quarles said the three agencies were working together on a “sprint” on cryptocurrency regulation. So, McWilliams’ remarks indicate that might be starting to bear fruit.
If the task force moves forward to approve a clear path to hold bitcoin. A whole new suite of offerings would be available for customers. A bitcoin holder faced with unexpected dollar expenses could loan it in their usual bank. But perhaps more importantly, this opens up the opportunity for traditional U.S. banks to hold BTC in their balance sheets. And a scarce asset that has the power to counteract the huge amounts of debt such institutions issue.
Although this development by the FDIC paves the way for easier mainstream adoption of Bitcoin and users are still economically incentivized to learn and custody their own coins. So, the only option for unlocking Bitcoin’s true potential.
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