FDIC Allows Banks to Own Bitcoin

[electronicash]

while SEC is trying to find ways to regulate cryptocurrency including the stablecoin issuers. Jelena McWilliams the Chairman of FDIC is telling the banks to own crypto assets. this is the example of "if you can't beat them, join them" since FDIC is not preparing a roadmap for banks to be able to own Bitcoin. there might be some issues and debates before this will happen since banks are regulated while crypto couldn't.

Jelena McWilliams Chair of FDIC said that "If we don't bring this activity inside the banks, it is going to develop outside of the banks. The federal regulators won't be able to regulate it."

https://www.reuters.com/business/finance/us-regulators-exploring-how-banks-could-hold-crypto-assets-fdic-chairman-2021-10-26/
https://www.bloomberg.com/news/articles/2021-10-26/fdic-is-preparing-guidance-on-banks-and-crypto-chief-says

but let's say its approved, will any of you go to deposit your BTC to banks?

[Bttzed03]

~ but let's say its approved, will any of you go to deposit your BTC to banks?

I wouldn't but some institutional investors probably would. I think that's the group these regulators are going after.

I don't think buying or converting Bank's own assets into crypto (owning) will be approved. The goal of the FDIC and other US regulators is more on offering a regulated crypto custodial service and I find that much easier and convenient for them. All they need to do is keep someone else's BTC and profit from it.

[Jawhead999]

FDIC still preparing the guidance to allows Banks own Bitcoin, if it's get approved I would see there's will be mass adoption on Bitcoin. Most of countries were banning Bank to own Bitcoin, so indeed it's a good news.

However based on his statement above, they're want to regulate Bitcoin which is it will kill privacy and Bank would frozen high-risk sources. If chainalysis cooperate with Banks then it's a disaster they wouldn't accept high-risk sources (e.g. mixer, casino, black market, etc).

[Poker Player]

~ but let's say its approved, will any of you go to deposit your BTC to banks?

I wouldn't but some institutional investors probably would. I think that's the group these regulators are going after.

And some individuals as well. There are people who will never in their life buy Bitcoin,if they cannot deposit it in the bank or other third party for supposedly safekeeping. Fortunately, there will be fewer and fewer of these over time, but the news is bullish nonetheless. People are going to go from seeing Bitcoin as something strange linked to fraud and buying drugs on the deep web to seeing that they can buy Bitcoin at the supermarket and at their bank.  

[Lucius]

but let's say its approved, will any of you go to deposit your BTC to banks?

I personally would never do that, not only because I think it is wrong for people to use custodial services on a large scale, as is the case with crypto exchanges, but because banks are much more dangerous than crypto exchanges in the sense that they are under much greater control of politicians and various interest lobbies who are just thinking about how to do as much damage as possible to Bitcoin.

Everyone invests it in Bitcoin, and then leaves it in the custody of someone completely unknown, did not actually buy Bitcoin, but only a promise that the bank will do something that is expected of it. Knowing the honesty and reputation that most banks have, I would not give them into custody anything as sensitive and valuable as Bitcoin.

[DaveF]

The FDIC is an insurance company. OK, yes it's part of the government but it still functions as an insurance company. Banks pay into it and it give their depositors piece of mind that if the bank implodes they still get their money (up to a point) out.

So in that respect since it's inception it has told banks what they can and cannot invest in. Same way there is a more then likely a clause in your auto insurance that if you race your car on a track and wreck it, they are not covering it.

So, what the FDIC is saying now, is that BTC investments will be covered, same way that other potential investments the banks make are covered.
Going to be interesting to see what the final paperwork is.

The SEC regulations are a totally different thing, and this is actually a big FU from one branch of the government to another regardless of what was said. The FDIC is coming out and saying our customers are going to be covered and safe, you do what you want, and if all the BTC flows to banks instead of the stock market, well it sucks to be you.

They just said it a lot more politely.

-Dave

[avikz]

while SEC is trying to find ways to regulate cryptocurrency including the stablecoin issuers. Jelena McWilliams the Chairman of FDIC is telling the banks to own crypto assets. this is the example of "if you can't beat them, join them" since FDIC is not preparing a roadmap for banks to be able to own Bitcoin. there might be some issues and debates before this will happen since banks are regulated while crypto couldn't.

Jelena McWilliams Chair of FDIC said that "If we don't bring this activity inside the banks, it is going to develop outside of the banks. The federal regulators won't be able to regulate it."

https://www.reuters.com/business/finance/us-regulators-exploring-how-banks-could-hold-crypto-assets-fdic-chairman-2021-10-26/
https://www.bloomberg.com/news/articles/2021-10-26/fdic-is-preparing-guidance-on-banks-and-crypto-chief-says

but let's say its approved, will any of you go to deposit your BTC to banks?

I don't think FDIC has any control on banks. Also it seems more like a personal comment rather than an official one. So I don't think we need to cheer about this news.

Also bitcoin is created to remove the greedy middleman loke banks. Personally I wouldn't do any crypto transactions with my bank even if government legalizes it. Just doesn't make sense! It's better to keep the bitcoins safer with you own system rather than with banks.

[Gyfts]

I'm glad they're making their intentions clear with their intention to regulate crypto activity. Saying the quiet part out loud perhaps, or maybe it isn't so quiet and their full intent to regulate crypto into the crowd so it doesn't compete with traditional assets or USD itself.  The banks can hold BTC as a traditional asset on their balance sheets or use become the middle man in BTC transactions so they can profit from being a facilitator. Doesn't seem like this concept would be attractive to any ordinary Bitcoin user so I'd hope no one would store their coin at a bank.

[mk4]

but let's say its approved, will any of you go to deposit your BTC to banks?

If you're an actual enthusiast, then it would make zero sense to hand over your BTC to banks. Self-custody is literally one of the best features of bitcoin. But yea, on the other hand, we have the boomers and the genXers. I don't think there's a reason to be doing this if you're a person that's capable of learning how to use a hardware wallet.

[dkbit98]

but let's say its approved, will any of you go to deposit your BTC to banks?

Even if this was possible, there is absolutely no reason for anyone to deposit Bitcoin to any bank if he already owns BTC, but there are much more people who don't own any Bitcoin now, and it could trigger a mass purchase if Banks start to offer selling of Bitcoin.
After reading her speech it's obvious to me that FDIC Chairman McWilliams is pro crypto person, and it's surprising to me even here positive view about stablecoins, however not once she mentioned Bitcoin.
She also mentioned hyperinflation in former Yugoslavia so she is well aware how that looks like, and that something similar could happen in United States and other countries around that world.

Full speech:
https://www.fdic.gov/news/speeches/2021/spoct2521.html

[dothebeats]

-snip-
Jelena McWilliams Chair of FDIC said that "If we don't bring this activity inside the banks, it is going to develop outside of the banks. The federal regulators won't be able to regulate it."

This is actually an angle that most regulators don't see and don't even consider the slightest. If regulators don't allow cryptocurrencies to flourish legally with fair regulations, it will grow somewhere else wherein they can miss lots of profits plus they can no longer control it. Sure, bans may be around the corner if things go way beyond their control, but what good does it do anyway?

I'm not in favor of letting the regulations favor banks handling crypto assets, but I'm in favor of fair regulations recognizing that cryptocurrencies are legal, and that holders of such assets shouldn't worry about being prosecuted. Also, McWilliams' statement is more of a personal comment on the matter, and doesn't hold any weight on the current state of bitcoin and crypto's regulatory status as FDIC, IIRC, does not control nor handle banks.

[Slow death]

but let's say its approved, will any of you go to deposit your BTC to banks?

the answer to this question can be answered with this other question:

if a person has 10 BTC and that person who has 10 BTC dies, how will that person's relatives benefit from 10 BTC?

You could say: it is enough for the person who has 10 BTC before dying to notify all relatives that he has 10 BTC that the problem will be solved, but if the person who has 10 BTC warns at home that he has 10 BTC and the relatives steal all his bitcoins?

here Is where a bank becomes very important, with the bitcoins kept in the bank, when the person dies, the bank will notify the beneficiary (relatives in this case) to take the 10 BTC

[vapourminer]

but let's say its approved, will any of you go to deposit your BTC to banks?

the answer to this question can be answered with this other question:

if a person has 10 BTC and that person who has 10 BTC dies, how will that person's relatives benefit from 10 BTC?

You could say: it is enough for the person who has 10 BTC before dying to notify all relatives that he has 10 BTC that the problem will be solved, but if the person who has 10 BTC warns at home that he has 10 BTC and the relatives steal all his bitcoins?

here Is where a bank becomes very important, with the bitcoins kept in the bank, when the person dies, the bank will notify the beneficiary (relatives in this case) to take the 10 BTC

there are better ways to make sure your coins go to someone after you die (lots of threads on this subject). so that reason is pretty much moot.

not your keys etc.

[bL4nkcode]

[...]
but let's say its approved, will any of you go to deposit your BTC to banks?

Businessmen and institutional investors might do, but I don't think normal traders will risk, tax is a thing, a higher fee for crypto/bitcon deposit is likely if it will be approved.

It will be an additional adoption and more government departments/bureau will follow and it will be another issue of being anonymous and decentralized feature of crypto/bitcoin.

[Vaskiy]

Bank serves as a safe place for our holdings providing mere interest. Only thing is the security, because it is under the centralized governing body. We also need to think about the risks associated with it, because large number of banks have closed without settling its users. As in one of the above quote we've got lot many ways to secure our crypto holdings and get used by nominated members on ones death.

Just think of reaching a bank and requesting our funds to be withdrawn. At times the banks decide when we need to withdraw and deposit. Banking is good for traditional fiat and things go complicated with bitcoin, because our holdings are in someone's control. At times we might be asked to provide the private keys too

Failed banks out of FDIC