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HomeNewsFederal Reserve Acts: Banks in Crypto Face Enhanced Oversight

Federal Reserve Acts: Banks in Crypto Face Enhanced Oversight

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  • The US Federal Reserve introduces the Novel Activities Supervision Program, further expanding its oversight on banks dealing with digital assets.
  • This program aims to create a level playing field for banks interacting with the crypto industry, alongside regulating specific crypto activities.

Federal Reserve Reinforces Regulations on Banking and Crypto Collaborations

The U.S. Federal Reserve, the nation’s central banking system, has escalated its supervisory framework, zeroing in on American banks that have associations with entities in the cryptocurrency and blockchain realm. As per an announcement on August 8, the Board introduced the Novel Activities Supervision Program. This program is tailored to establish boundaries on select crypto-focused undertakings, intending to foster fair competition among banks that extend services to the burgeoning digital asset sector.

Crucial Components of the New Program

This regulatory stride isn’t the Federal Reserve’s first venture into crypto supervision. It is, in fact, an extension to the policy statement dated January 27, ensuring that all Board-supervised banks come under the same crypto-specific purview.

Activities now under this freshly minted regulatory lens encompass a wide range, such as the custody, trading, lending, issuance, and even the circulation of cryptocurrencies, with a special mention of stablecoins.

Beyond direct cryptocurrency dealings, the Board’s letter expounded on the program’s intent to also regulate the provision of core banking amenities to businesses dealing in digital assets. Similarly, collaborations with corporations harnessing distributed ledger technologies (DLT) will also fall under this watchful supervision.

Delving into the crux of this initiative, the Federal Reserve Board emphasized the dual objectives of the Novel Activities Supervision Program. On one side, it seeks to stimulate financial innovation. Conversely, it underscores the importance of robust risk management protocols. This balanced approach is projected to ensure the unwavering integrity and stability of the American banking ecosystem.

As part of this augmented oversight, banks enrolled in this “risk-centric” scheme could potentially undergo thorough scrutiny by the Federal Reserve Board. The core purpose? To ascertain that these “novel activities” align seamlessly with established Board guidelines and, more critically, the overarching U.S. legislation.

It’s imperative to note that this enhanced supervision isn’t limited to just insured banking institutions; uninsured U.S. banks that fall under the Board’s watch will also need to toe the line.

In a nuanced stance, while the program delineates more stringent regulations for banks, the Federal Reserve’s message seems to hint that it doesn’t intend to dissuade state-chartered banks from fostering relationships within the sector, including those with digital asset enterprises.

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Nikita Dmitrievich
Nikita Dmitrievichhttps://www.ethnews.com/
Nikita, a young and ambitious crypto investor who has been actively involved in the cryptocurrency world for the past 6 years. With a keen interest in blockchain technology, Nikita has been investing in various cryptocurrencies and has seen significant returns on his investments. He is passionate about educating others on the potential of cryptocurrencies and frequently shares his insights on social media platforms. Nikita believes that cryptocurrencies are the future of finance and is constantly researching new projects to invest in. With his dedication and knowledge, Nikita is quickly becoming a prominent figure in the crypto community. Business Email: info@ethnews.com Phone: +49 160 92211628
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