Federal Reserve expands supervision of cryptocurrency banks

The United States Federal Reserve announced a significant expansion of its supervision program aimed at banks in the country that operate in the field of cryptocurrencies and blockchain technology.

In a statement issued on August 8 by the Federal Reserve Board, the “Innovative Activities Oversight Program” was introduced. This program aims to restrict certain operations related to cryptocurrencies and create a more equitable environment for banks that provide services in the digital asset industry.

This initiative is in addition to a regulation previously announced by the Board on January 27, the purpose of which is to ensure that all banks under Fed supervision are subject to the same restrictions when it comes to cryptocurrency operations.

The activities that will be regulated under this new program include the custody, lending, trading, issuance or distribution of cryptocurrencies, including stablecoins. The provision of banking services to companies related to digital assets is also regulated, as well as collaboration with entities that use distributed ledger technologies, as detailed in an official communication from the Board.

The Federal Reserve indicated that the primary objective of this program of innovative activities is to balance financial innovation with appropriate risk management, in order to ensure the stability and soundness of the banking system in general.

Banks enrolled in the program and participating in “risk-based” activities will be subject to evaluation by the Federal Reserve Board. This council will evaluate whether the new operations are in accordance with US policies and laws.

Importantly, these policies will apply to both insured banks in the United States and to uninsured banks that are supervised by the Federal Reserve Board.

Although the purpose of the program is to provide more rigorous oversight of US banks, the Federal Reserve has made it clear that it has no intention of discouraging state-owned banks from collaborating with industry, which presumably includes the digital assets sector.

K. Tovar

Source: Cointelegraph

(Reference image source: Joshua Woroniecki, Unsplash)

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