Featured Product

    FDIC Updates on Crypto Asset Supervision and Digital ID Tech Sprint

    April 07, 2022

    The Federal Deposit Insurance Corporation (FDIC) issued a letter to set out guidance on activities related to crypto assets and announced, jointly with the Financial Crimes Enforcement Network (FinCEN), the three teams selected in the Digital Identity (ID) Tech Sprint.

    The letter on crypto-asset guidance notes that all FDIC-supervised institutions that intend to engage in, or that are engaged in, any activities involving or related to crypto assets (also referred to as “digital assets”) should notify the FDIC. These supervised institutions are requested to provide certain information to FDIC, with the requested expected to vary on a case-specific basis, depending on the type of crypto-related activity. However, the initial notification to the FDIC Regional Director should describe the activity in detail and provide the institution’s proposed timeline for engaging in the activity. Upon receipt, FDIC will review the notification and information received, request additional information as needed, and consider the safety and soundness, financial stability, and consumer protection considerations of the proposed activity. FDIC will provide relevant supervisory feedback to the FDIC-supervised institution, as appropriate, in a timely manner. FDIC notes that there is little consistency in the definitions associated with many crypto assets and crypto-related activities, which makes it difficult to categorically identify these assets and activities. Furthermore, the structure and scope of these activities are rapidly changing and expanding. Therefore, activities, it is difficult for institutions, as well as the FDIC, to adequately assess the safety and soundness, financial stability, and consumer protection implications without considering each crypto-related activity on an individual basis. Institutions notifying FDIC are also encouraged to notify their state regulator. The crypto-related risks include anti-money laundering/countering the financing of terrorism risk, information technology risk, credit risk, credit counterparty risk exposure, systemic risk, and consumer risk.

    The FDIC and FinCEN Digital Identity Tech Sprint aimed to help measure the effectiveness of digital identity proofing, which is the process used to collect, validate, and verify information about a person. Nearly 60 participants were selected from over 200 others seeking to compete in the Tech Sprint. These participants formed eight teams to present their solutions to a panel of government judges; out of these, three teams have been selected in the three categories of Creativity, Effectiveness/Impact, and Market Readiness. The FDIC and FinCEN are seeking solutions to measure the effectiveness of digital identity proofing for greater reliance in assessment and calibration of risks. Among other factors, the potential solutions could consider applicability to identify proofing that may apply to a multitude of financial products and how the community banks, largest financial institutions, and third-party service providers might partner to collectively deliver and test the solution. The solutions developed from this Tech Sprint will inform the future FDIC, FinCEN, and industry-led efforts, plans, and program to increase efficiency and account security; reduce fraud and other forms of identity-related crime, money laundering, and terrorist financing; and foster customer confidence in the digital banking environment. Innovations developed for this Tech Sprint could encompass a range of outcomes such as:

    • developing a scoring model for digital identity proofing sources and processes
    • findings and research-backed observations on how to enhance assessing existing solutions
    • applications of artificial intelligence/machine learning programs to identify and “red flag” questionable identities leading to dynamic scoring OR
    • creating other technical solutions that help answer the question "What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely present themselves for financial activities are who they claim to be?"


    Related Links


    Keywords: Americas, US, Banking, Crypto-Assets, Digital Assets, Financial Stability, AML CFT, FinCEN, Tech Sprint, Fraud Detection, KYC, Regtech, Credit Risk, Systemic Risk, Basel, FDIC

    Featured Experts
    Related Articles

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582