Bank Ceases Development of Crypto Asset Service
FDIC
Federal Deposit Insurance Corporation
25 Jessie Street at Ecker Square, Suite 2300
San Francisco, California 94105
Division of Risk Management Supervision
San Francisco Regional Office
(415) 546-0160
Via Secure Email
October 31, 2023
Board of Directors
XXXXX XXXXX XXXXX
Subject: Notification of Engagement in Crypto-Related Activities
Dear Members of the Board:
XXXXX (the Bank) engaged in initial discussions with the FDIC beginning in May 2021, followed by several subsequent discussions beginning in April 2022, regarding the Bank’s engagement with XXXXX to develop a crypto-asset service offering with XXXXX that would allow Bank customers to buy, sell, and hold bitcoin. On April 7, 2022, the FDIC issued Financial Institution Letter (FIL)-16-2022, Notification of Engaging in Crypto-Related Activities. FIL-16-2022 requested that all FDIC-supervised institutions that intend to engage in, or that are currently engaged in, any activities involving or related to crypto-assets (also referred to as “digital assets”) promptly notify the appropriate FDIC Regional Director and stated that the FDIC may request information necessary to allow the FDIC to assess the safety and soundness, consumer protection, and financial stability implications of crypto-related activities. In order to begin those assessments, in April and October of 2022, the FDIC requested additional documentation from the Bank, including policies, processes, and controls established and maintained in relation to this crypto-related activity. On October 21, 2022, the FDIC sent a letter to the bank’s Board of Directors asking them to refrain from expanding the service to its customers until we completed our review. On August 14, 2023, the FDIC provided supervisory feedback to the bank relative to the activities your institution was considering to pursue.
On September 29, 2023, Executive Vice President/Chief Banking Officer (CBO) XXXXX sent an email to Case Manager XXXXX stating that the Bank “is no longer involved in XXXXX virtual currency.” The FDIC acknowledges the bank’s updated status related to this activity. As a result of the Bank’s September 29, 2023 communication to the FDIC, the October 21, 2022 FDIC letter to the Board has been superseded. We request that the Bank notify this office if the status of this activity, or other crypto-related activity, changes in the future.
If you have any questions, please contact Risk Management Supervision (RMS) Assistant Regional Director Jaclyn Valderrama at XXXXX, RMS Case Manager XXXXX at XXXXX.
Board of Directors XXXXX Crypto-Related Activity Page 2
XXXXX, Depositor and Consumer Protection (DCP) Assistant Regional Director Susan Pinette at XXXXX, or DCP Review Examiner XXXXX at XXXXX
Sincerely,
/s/ Louis C.C. Cheng /s/ Dana Crutchfield
Louis C.C. Cheng Dana Crutchfield RMS Acting Deputy Regional Director DCP Deputy Regional Director
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