Top American Regulator Puts Crypto At Top Of 2022 Priority List After Evaluating Risks

• The FDIC plans to make cryptocurrency a top priority in 2022.
• The body is calling for a regulatory framework guiding crypto interaction with traditional finance.
• Regulations are imminent for the nascent market in 2022.

The Federal Deposit Insurance Corporation (FDIC) has revealed that the crypto industry and its risk to users will be the top priority for the firm this year. This comes as regulatory scrutiny of the nascent market continues to increase.

Crypto Could Pose A Risk To Traditional Finance Systems

The FDIC revealed their intent in a press release on their website from the office of the acting Chair Martin Gruenberg. In the statement, the body reaffirmed its commitment to sustain confidence in the US financial system.

“The FDIC’s core mission is to maintain stability and public confidence in the U.S. financial system. The FDIC carries out this mission through its responsibilities for deposit insurance, banking supervision, and the orderly resolution of failed banks, including systemically important financial institutions. Banking supervision encompasses safety and soundness and consumer protection, both of which are essential to this important mission.”

In the official statement, the acting chair of the corporation noted that crypto assets and products were on the rise and, as such, the body needed to review the engagement of banks with these assets and if there was an underlying risk. The statement said, “the rapid introduction of a variety of crypto-asset or digital asset products into the financial system could pose significant safety and soundness and financial system risks.” Gruenberg, in the statement, emphasized the need for federal bodies to evaluate the scope of engagement of these assets and the traditional banking sector.

Gruenberg revealed that regulators had to provide a framework that limited the risks faced by participants in the nascent market. It would not be the first time the FDIC has come up in matters related to crypto regulations. Earlier this year, there was a debate as to whether stablecoin deposits should be insured by the FDIC, following plans to launch a stablecoin by some FDIC-approved banks.

In 2022, Regulations Will Flood The Crypto Space

The sentiments shared by Martin Gruenberg echo those shared by the Bank of England’s Deputy Governor for Financial Stability last year, Sir Jon Cunliffe. He said, “The point, I think, at which one worries is when it becomes integrated into the financial system when a big price correction could really affect other markets and affect established financial market players.”

The Biden administration has also revealed plans to release an executive order on cryptocurrencies this month. The order seeks to create a framework that would allow federal bodies to co-operate on crypto regulation to achieve regulatory clarity.

This is happening as Congress is beginning to evaluate the energy and environmental concerns raised by Bitcoin mining. As a result, many Bitcoin mining firms have been asked to submit reports to the house on their energy consumption.