US Fed steps up oversight of banks’ involvement with crypto firms

The US Federal Reserve is broadening the scope of its supervision program which oversees U.S. banks that interact with the cryptocurrency and blockchain business.

An Aug. 8 announcement by the Federal Reserve Board established the Novel Actions Supervision Program which goals to restrict sure crypto-related actions and facilitate a extra truthful taking part in area for banks concerned with servicing the digital asset business.

This system is an extra measure to the Board’s Jan. 27 coverage statement that goals to make sure all Fed-supervised banks are topic to the identical crypto-related limitations.

@federalreserve gives further info on its program to oversee novel actions within the banks it oversees: https://t.co/6MiItQwO7V

— Federal Reserve (@federalreserve) August 8, 2023

Actions regulated beneath this system embody the custody, lending, buying and selling, issuance or distribution of crypto together with stablecoins.

Offering banking infrastructure to digital asset corporations or working with corporations that use distributed ledger applied sciences can also be regulated, based on a letter from the Board.

The Fed stated the target of the novel activities program is to steadiness monetary innovation with applicable risk management practices to make sure the security and soundness of the banking system.

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Registered banks concerned within the “risk-based” program could also be topic to examination by the Fed Board which is able to consider whether or not the novel activities are in compliance with its insurance policies and U.S. legislation.

The insurance policies apply to each insured and uninsured U.S. banks supervised by the Board.

Whereas this system appears to be like to offer stricter oversight on U.S. banks, the Federal Reserve implied that it isn’t discouraging state banks from slicing ties with business, presumably together with the digital asset agency sector.

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