The Fed issues 'crypto sprint' roadmap for the new cryptocurrency regulation and tax law guidance
After President Biden signed the crypto taxation provisions in the infrastructure bill into law last week, all eyes turned on the Federal Reserve for guidance on the murky digital asset tax requirements. The Fed, together with the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) reacted quickly and issued a statement outlining the way forward in cryptocurrency regulation. The so-called "Joint Statement on Crypto-Asset Policy Sprint Initiative and Next Steps" (PDF) seems to be anything but a sprint:
Throughout 2022, the agencies plan to provide greater clarity on whether certain activities related to crypto-assets conducted by banking organizations are legally permissible, and expectations for safety and soundness, consumer protection, and compliance with existing laws and regulations related to:
- Crypto-asset safekeeping and traditional custody services.
- Ancillary custody services.
- Facilitation of customer purchases and sales of crypto-assets.
- Loans collateralized by crypto-assets.
- Issuance and distribution of stablecoins.
- Activities involving the holding of crypto-assets on balance sheet.
The agencies also will evaluate the application of bank capital and liquidity standards to cryptoassets for activities involving U.S. banking organizations and will continue to engage with the Basel Committee on Banking Supervision on its consultative process in this area.
Those who expected a quick clarification on the new crypto tax law implementation may be disappointed to hear that the reading of its provisions will remain in flux, with all the potential repercussions stemming from the law's non-specific language. One reason why the US financial agencies are kicking the crypto asset regulation can down the road for next year might be because President Biden still has to appoint a new Vice Chair of Supervision on the Fed's Board of Governors. According to Senator Elizabeth Warren, they will have to be "a strong regulator with a proven track record of tough and effective enforcement."
The only thing that becomes clearer by the Fed's joint statement on the "cryptoassets sprint" initiative, is that banks will have to apply for a dedicated permit before the OCC if they want to dabble in digital coins. All else will be revealed come 2022, it seems.