FDIC Email Exchange on Crypto Activity Monitoring

From: XXXXX Sent: Monday, April 24, 2023 5:36 PM To: FDIC San Francisco Regional Office Subject: RADD Room

a. Include email: Yes b. Institution Name: XXXXX c. City: XXXXX d. State: XXXXX e. Division: RMS f. Folder: Correspondence g. Source: RO h. Doc Name: Miscellaneous i. Description: Update on crypto firm XXXXX

From: Muraywid, Sumaya A. XXXXX@FDIC.gov Sent: Tuesday, March 21, 2023 4:46 PM To: XXXXX Cc: XXXXX; Macias, Sandra XXXXX@FDIC.gov; Ties, Nicholas F. XXXXX@FDIC.gov Subject: RE: XXXXX Update

Thank you XXXXX That’s very helpful. It looks like there is a DCP exam in May, which will be a good opportunity for follow-up.

Thank you for all of your collaboration and follow-up on the crypto-asset related activity. Much appreciated.

From: XXXXX Sent: Tuesday, March 21, 2023 11:44 AM To: Muraywid, Sumaya A. XXXXX@FDIC.gov; XXXXX Cc: XXXXX; Macias, Sandra XXXXX@FDIC.gov; Ties, Nicholas F. XXXXX@FDIC.gov Subject: RE: XXXXX Update

Good Morning Sumaya XXXXX Please see my answers in red below.

Best,

XXXXX Senior Risk Management Examiner Federal Deposit Insurance Corporation XXXXX fdic.gov

From: Muraywid, Sumaya A. XXXXX@FDIC.gov
Sent: Monday, March 20, 2023 4:16 PM
To: XXXXX
Cc: XXXXX; Macias, Sandra XXXXX@FDIC.gov; Ties, Nicholas F. XXXXX@FDIC.gov
Subject: RE: XXXXX Update

Hi XXXXX

  1. Thank you for sending this. To clarify, the retail working group was not involved, sorry for the confusion. To reflect collaboration with the WO, it would be RMS PPD and RMAS, as well as DCP. Thank you for the clarification, I will reflect the change in the A-Page Comment.

  2. In terms of XXXXX, I'm uncertain what 'cryptocurrency activity' would mean for the proposed A-page comment. Do you mean that the examination identified that XXXXX is engaged in crypto-asset activity, however, the funds held at the bank as of the exam represent capital raises, and that bank management provided information on the last day of the exam that indicated XXXXX customers will send funds to XXXXX account at the bank, so that XXXXX can purchase bitcoin on behalf of their users? If that is the case, did the bank provide copies of the end user agreement/disclosure? I think cryptocurrency activity may be expected in the future. Currently most of XXXXX money at XXXXX (see table below) is in CDs from capital raises. Our understanding was/is that XXXXX (cryptocurrency) has not actually started yet. Yesterday, I followed up with the BSA Officer and this is his email response: "Based on our most recent conversations with XXXXX, XXXXX

  3. XXXXX

Thanks,
Sumay XXXXX

From: XXXXX
Sent: Friday, March 17, 2023 8:10 PM
To: XXXXX

Subject: RE: XXXXX Update

Hello, The open section of the exam will note that XXXXX accounts closed on or before XXXXX. I have the following A-page comment to provide continuity to future visits/exams:

Crypto Customers

Given that XXXXX serves as a custodian of crypto customers, the FDIC’s Retail Emerging Technology Working Group requested that certain documents be uploaded to XXXXX Chief, Emerging Technology Section Sumaya Muraywid is the Point of Contact.

The latest information for XXXXX was uploaded to the aforementioned XXXXX. The deposit accounts reflects capital raised, but at this time, there does not appear to be cryptocurrency activity - yet. However, this relationship should be reviewed at the next visitation or examination.

Best,

XXXXX
Senior Risk Management Examiner
Federal Deposit Insurance Corporation

XXXXX
fdic.gov

From: XXXXX
Sent: Tuesday, March 07, 2023 5:51 PM
To: XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Muraywid, Sumaya A. XXXXX@FDIC.gov
XXXXX
Sheeren, Matthew L. XXXXX@FDIC.gov
XXXXX

Subject: RE: XXXXX Update

Hi All,

As there were several questions about XXXXX, I wanted to provide closure and some assurances that the DDA accounts are small relative to XXXXX footing XXXXX. As of 2/28/23, XXXXX DDAs total XXXXX, down from XXXXX at 9/30/22. There are also CDs As of 2/28/23 they total XXXXX, up from XXXXX 9/30/22. As of I don’t have much to add from a paragraph that I provided before and some notes that CM XXXXX and CM XXXXX took based on a call with CE XXXXX. I don’t have much more to add than what is below as our focus was XXXXX footings and wire flows.

XXXXX

XXXXX
XXXXX Relationship (Source FDIC Examiner) XXXXX Draft Conclusion Memo)

At the 8/22/22 Visitation, the XXXXX relationship was reviewed by DFPI XXXXX XXXXX is considered a XXXXX XXXXX involved in cryptocurrency transactions. However, the accounts were not being utilized for crypto-asset activity XXXXX XXXXX.

However, management provided information on the last day of the on-site portion of the examination (2/10) indicating that the accounts are or will be utilized for cryptocurrency activity. Below is an excerpt from a document provided by management relating to recent discussions with XXXXX management:

XXXXX

Upon request for an updated review of this relationship and recent transactional activity, management had not provided this information as of the writing of this memo.

XXXXX Relationship (Source FDIC Case Managers) XXXXX based on phone call with CEO XXXXX

XXXXX

Best,
XXXXX
Senior Risk Management Examiner
Federal Deposit Insurance Corporation
XXXXX
XXXXX@FDIC.gov

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