FDIC Emails Discuss Bank's Crypto Service Proposal

From: [b8] Sent: Tuesday, April 5, 2022 7:08 PM To: [FDIC Kansas City Regional Office] Subject: XXXXX email only [b8] Categories: [b8]

Please place email in RADD.

Thank you.

From: [b8] Sent: Tuesday, April 5, 2022 3:15 PM To: [b8] Cc: Gaddie, Stephen P. XXXXX@FDIC.gov Subject: RE: Voice Message from [b6]

I just spoke XXXXX. It sounds like he is in fact finding mode and hasn’t even pitched the idea to XXXXX et al. yet. Mr. XXXXX said that XXXXX the company that provides the bank’s internet banking and mobile platforms is selling the idea. He is waiting on copies of the slides from XXXXX presentation, and he will forward them to us upon receipt. But essentially, the service would allow XXXXX customers to purchase Bitcoin and eventually expand to other types of Cryptocurrencies, similar to XXXXX. XXXXX would get a fee for facilitating the transaction. Mr. XXXXX thinks there would be interest in this service based on the number of XXXXX transactions he sees by the bank’s customers, and the transactions generally range from XXXXX.

I told Mr. XXXXX that it is hard to opine without knowing exactly how they intend to implement the relationship. I talked to him about the interagency Request for Information and Comments on Digital Assets and the lack of clear-cut laws and guidance or even a regulatory direction. I also told him however, that we certainly have banks that engage in crypto-related activities. Regardless, we would require a detailed understanding of the product, robust policies and procedures, and maybe even additional capital. We talked about who would hold the risk in the transactions and making sure management had a solid understanding of XXXXX financial position (obtaining frequent financials); XXXXX ability/process/procedures for clearing transactions; and XXXXX potential need to keep margin on account at the bank.

I also told him that depending on what, if, they finally submit, we may have to run it through our Washington office.

Let me know if you disagree with anything I told him based on what he knows or if I forgot to disclose anything I should have.

Thanks,

[b8]