After India, US regulators about to get tough on crypto

San Francisco/New Delhi: In a first attempt to crack down on crypto, the US's banking regulators have announced a plan to clarify the rules and regulations around how banks can use cryptocurrencies over the next year, IANS reported.

As per a report by The Verge, the agencies say they're focusing on setting expectations for what banks can do when it comes to holding crypto, allowing customers to obtain crypto, issuing their own stablecoins, and taking crypto as collateral for loans and keeping it on their balance sheets.

The announcement comes at a time
when governments in the world over, including India, is considering a proposal to treat cryptocurrencies as a financial asset while safeguarding small investors.

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

The regulators in a joint statement issued on Wednesday also noted the importance of agencies providing coordinated and timely clarity to promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, as supervised institutions seek to engage in crypto-asset-related activities.

Throughout 2022, the US agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organisations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations.

As the market evolves, the agency will continue to monitor developments in crypto-assets and may address other issues.

Further, the agencies also remarked that they will engage and collaborate with other relevant authorities, as appropriate, on issues arising from activities involving crypto-assets.

In India, the upcoming Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to prohibit all private cryptocurrencies in India.

It, however, allows for certain exceptions to promote the underlying technology of cryptocurrency and its usage.

With the Indian government seeking to ban all private cryptocurrencies in the Crypto Bill 2021, experts and leading industry players have said that provisions relating to "banning" private cryptocurrencies would have to be looked at very carefully.

Several high-profile meetings have been held to discuss the regulation of cryptocurrencies in recent days. The Parliamentary Standing Committee had also called for the regulation on cryptocurrencies and its ecosystem.