Fed Expands Regulatory Oversight of Crypto-Involved Banks

The United States Federal Reserve is expanding its oversight program to encompass U.S. banks active in the cryptocurrency and blockchain sector.

A declaration made on August 8th by the Federal Reserve Board introduced the Innovative Activities Supervision Program. The program aims to regulate specific crypto-related activities and promote equitable conditions for banks serving the digital asset industry.

This initiative builds upon the Board’s policy statement from January 27th, which strives to enforce uniform crypto-related restrictions across all banks under Federal Reserve supervision.

The program’s regulatory scope encompasses activities like custody, lending, trading, and the issuance or distribution of cryptocurrencies, including stablecoins. Besides, offering banking services to digital asset companies and collaborating with businesses employing distributed ledger technologies are also subject to regulation, according to a statement from the Board.

The Federal Reserve emphasises that the novel activities program seeks to balance financial innovation and effective risk management practices to uphold the stability and integrity of the banking system.

Banks registered in the “risk-based” program may undergo scrutiny by the Federal Reserve Board, which will assess the compliance of these novel activities with established policies and U.S. legal frameworks.

These policies apply to both insured and uninsured U.S. banks that fall under the Board’s supervision.

While the program aims to tighten oversight on U.S. banks, the Federal Reserve implies that it does not intend to dissuade state banks from engaging with the industry, including the digital asset sector.

Source: CoinCulture