The U.S. Federal Deposit Insurance Corp. (FDIC) has left the banks it oversees unequipped to navigate the regulator’s crypto expectations, according to the agency’s inspector general, so the FDIC agreed to field a new strategy by January.
The Office of the Inspector General for the FDIC – an internal watchdog function within U.S. agencies – studied the banking agency’s performance when it came to preparing the industry for crypto’s risks and found it lacking, according to a report issued on Wednesday.
“The FDIC’s lack of clear procedures causes uncertainty for supervised institutions in determining the appropriate actions to take,” the report concluded, adding that the agency also hadn’t concluded its effort to assess whether it could head off systemic banking dangers from crypto.
The inspector general noted that the agency told some banks to pause their crypto activities last year and this year, but then it didn’t tell the banks how long they’d be paused or how it might end.
The FDIC had a momentous year, featuring a number of significant bank collapses, specifically involving major institutions that had tech or crypto ties. The agency has been suspicious of the digital assets industry and has leaned toward shielding the banking system from deep involvement with crypto – a stance felt acutely by crypto businesses struggling to find and maintain banking relationships in the U.S.
The agency agreed to inspector general recommendations that it come up with a plan and schedule for figuring out the risks cryptocurrency activity poses to lending institutions, and that it also clarify its process for the crypto reviews at individual banks.