technology · KICKOFF 28 AUG
FDIC: Bank Regulators Issue Rule on Unsafe or Unsound Practices Aug. 27
The OCC and FDIC issued a joint final rule on August 27 that defines unsafe or unsound practices and directs examiners to focus on material financial risks. The rule does not address cryptocurrency and takes effect 60 days after Federal Register publication.
Discussion in live crypto rooms turned to the OCC and FDIC joint final rule released on August 27.
The OCC and FDIC issued a joint final rule Thursday, Aug. 27, 2026, defining “unsafe or unsound practice” for 12 U.S.C. 1818 and setting uniform standards for Matters Requiring Attention. Examiners should prioritize concerns related to material financial risks over those regarding policies, process, documentation, and other nonfinancial risks, according to the joint release. The rule does not name cryptocurrency and does not require banks to serve crypto companies, CryptoTimes reported on Aug. 28. It becomes effective 60 days after Federal Register publication.
Definition of Unsafe or Unsound Practice
The final rule defines an unsafe or unsound practice as conduct contrary to generally accepted standards of prudent operation that is likely to materially harm the bank’s financial condition or present a material risk of loss to the Deposit Insurance Fund. Financial condition covers capital, asset quality, earnings, liquidity, or sensitivity to market risk. The definition excludes risks to the bank’s reputation unrelated to financial condition, the agencies stated in the joint documents.
Background and Scope
The rule follows an October 2025 proposal and includes modifications. It applies to institutions the agencies supervise. OCC Bulletin 2026-40 was released alongside the FDIC joint release. BSA/AML, sanctions, and consumer-protection duties remain unchanged. The Federal Reserve’s separate reputation-risk proposal remains outstanding.
Supervisory Standards
The new standard narrows regulatory enforcement to material financial risks and legal violations. It raises the threshold for formal findings based on process, documentation, and other non-financial weaknesses. Banks receive an opportunity to address issues before formal action, according to coverage of the announcement.
Market Snapshot
Majors showed modest moves on August 28. Bitcoin stood at $79,348, down 1.5 percent. Ethereum traded at $2,505.05, off 0.7 percent. XRP was at $1.42, SOL at $105.39, and DOGE at $0.087002, each posting declines between 1.7 and 2.7 percent.
Publication and Implementation
The exact Federal Register publication date is not yet set. Once published, the rule provides a uniform definition that had not existed in statute or regulation previously. The agencies said the change brings greater certainty to bank supervision.
Distinctions from Other Actions
This rule is separate from the SEC custody filing under review at OIRA and does not alter bank obligations related to cryptocurrency services. It focuses strictly on material financial risks within the supervised institutions.