Bank's Bitcoin Service Discussion

MEMO

DATE: April 4, 2022

MEMO TO: Correspondence File — XXXXX

FROM: Daniel W. Holmgren, Assistant Regional Director

SUBJECT: XXXXX Relationship with XXXXX to Conduct Crypto Asset Activities

On Monday, April 4, 2022, 11:30am CT, ARD Dan Holmgren called into (with Case Mgr XXXXX) a webex session with XXXXX and CRO XXXXX from XXXXX. We were aware that bank management had been working with XXXXX toward offering XXXXX customers a means to buy, sell, and/or hold Bitcoin through the bank.

I opened the call by introducing XXXXX as the new Case Manager assigned to XXXXX. I then led into the XXXXX discussion by explaining that regulators are having much discussion on all aspects of digital assets, and that there are some that see some elements of principal activities in areas that were previously thought of as agency activities.

XXXXX is still in the testing and risk-assessing stage with respect to any relationship with XXXXX. They’ve been looking at ways to offer simple digital currency services to their customers as part of a full array of product lines for their customers. Through the bank’s internal monitoring systems, management recently determined that its customers have had at least XXXXX digital currency transactions totaling approximately XXXXX.

The bank has a high level executive committee overseeing the initiative. Risk assessment is ongoing. The bank’s legal counsel is involved in the risk assessment process. Chief Risk Officer XXXXX views the initiative as a novelty that XXXXX seeks to offer its customers. Activity would be limited to buying, selling, and/or holding Bitcoin (i.e., no other digital currencies or assets). As a standard matter, any customer engaging in this product would have to first sign an agreement/acknowledgement that their Bitcoin transactions are with XXXXX rather than with the bank. There is a daily settlement process, and a XXXXX fee per transaction. XXXXX is not currently contemplating any other crypto-asset solutions or product offerings.

By the conclusion of the discussion it was clear that XXXXX would not go live with this product offering until they could be sure they could conduct the activities as agent, and that the FDIC would be satisfied that the activities were legally permissible.