The Federal Deposit Insurance Corporation has its eyes set on cryptocurrencies.

A team of U.S. bank regulators will be teaming with other agencies to coordinate policies for how and under what circumstances banks can engage in activities involving crypto.

The regulatory agency has been working with the Federal Reserve and the Office of the Comptroller of the Currency to provide a roadmap for banks to engage with crypto assets, FDIC Chairman Jelena McWilliams said at the Money 20/20 conference in Las Vegas.

“I think that we need to allow banks in this space while appropriately managing and mitigating risk,” McWilliams, who chairs the top US bank regulator FDC, said in an interview.

“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 crypto “sprint” team, first announced in May, aims to ensure crypto policy coordination between their main US bank regulators, FDIC, Fed, and OCC. The policy could cover clearer rules over crypto custody, using them as collateral for loans, or holding them on balance sheets.

“My goal in this interagency group is to basically provide a path for banks to be able to act as a custodian of these assets, use crypto assets, digital assets as some form of collateral.”

“At some point in time, we’re going to tackle how and under what circumstances banks can hold them on their balance sheet.”

While laying out a roadmap for providing custody for crypto assets would be an easy issue to handle, it is difficult to allow the volatile asset to be used as collateral or put it on bank balance sheets, she added.

“The issue there is … valuation of these assets and the fluctuation in their value that can be almost on a daily basis.”

“You have to decide what kind of capital and liquidity treatment to allocate to such balance sheet holdings.”

She also mentioned stablecoins, saying they should be “subject to well-tailored government oversight” to realize their full potential benefits while accounting for potential risks.

Overall, the idea is “to provide clear rules of the road to allow innovation to flourish while mitigating risks,” McWilliams said.

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