Federal Reserve Dives Deeper into Crypto-Related Activities for US Banks
The post Federal Reserve Dives Deeper into Crypto-Related Activities for US Banks appeared first on Coinpedia Fintech News
The world of cryptocurrency, with its potential to revolutionize banking, has caught the watchful eye of the Federal Reserve. The US central bank has made a bold move to widen its net over the crypto activities of regulated banks. This comes as the latest in a series of attempts by regulatory bodies worldwide to adapt to the rapid advancements in the fintech sector.
A New Oversight Era
Under the newly minted “Novel Activities Supervision Program”, the Federal Reserve is set to focus not only on cryptocurrencies but also other emerging asset classes and applications rooted in distributed ledger technology (DLT). The program’s intent, as outlined, ranges from monitoring crypto-asset custody and crypto-collateralized lending to stablecoin/dollar token issuance.
Delving into DLT and Beyond
But it’s not just about cryptocurrencies. With the rapidly growing influence of Distributed Ledger Technology (DLT) in the banking sector, the program also lays a keen eye on “technology-driven partnerships with nonbanks”. These innovative approaches aim to provide a fresh palette of financial services to consumers.
Safety First
Despite the advancements, there’s a consensus: safety is paramount. The Federal Reserve has explicitly stated its objective to ensure that member banks enact controls for a “safe and sound” approach to novel activities. There’s a rising sentiment that conventional supervisory methods may not adequately address the peculiar challenges posed by these emerging technologies.
Who’s on the Radar?
While there’s some ambiguity about which firms will face stricter scrutiny, it’s clear that the oversight won’t be limited to just the industry’s heavyweights. Regional operators, including banks with assets totaling $10 billion or less, will also fall under the program’s jurisdiction.
Stablecoin Spotlight
In a move that elicited mixed reactions from the crypto community, the Federal Reserve has provided a clear process for state member banks to engage in stablecoin activities. The blueprint for this involves a detailed notification process, wherein the bank would delineate its proposed activities, addressing a gamut of risks.
Industry’s Mixed Bag of Reactions
The reactions from the crypto world to the Federal Reserve’s announcement have been a mixed bag. Notable investor Nic Carter perceives the move as an attempt to “discourage innovation”. His apprehension mainly centers around the stipulations for stablecoin issuance.
On the flip side, Avi Felman from asset management firm Golden Tree views the announcement as a positive step. He believes it signals a “clear shift in tone” regarding crypto from influential quarters.
