On December 18, the Federal Reserve revoked a coverage that had prevented some US banks from partaking in cryptocurrency providers.
This determination replaces steering issued in January 2023. The coverage withdrawal implies that insured and uninsured banks overseen by the Federal Reserve face the identical course of for in search of approval to get entangled with cryptocurrencies.
The assertion issued by the Federal Reserve clarifies that the earlier steering not strains up with the regulator’s present place on which monetary choices are appropriate for several types of banks.
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Beneath this new framework, non-federally insured banks are not barred from pursuing actions equivalent to stablecoin funds and digital asset custody in the event that they safe the mandatory approvals and reveal ample danger administration.
Fed Governor Michael Barr raised issues in regards to the change. Barr argued this may introduce regulatory arbitrage by permitting banks exterior the federal deposit insurance coverage system to tackle digital asset actions that may in any other case be restricted for federally insured banks.
He warned that this might have an effect on stability and the aggressive stability within the banking trade. Barr stated in an official assertion launched on December 18:
Allowing uninsured banks to have interaction in these crypto-asset-related actions on phrases completely different from those who apply to insured banks may drive extra dangerous methods to much less regulated corners of the banking system.
US Democrats Elissa Slotkin and Jerry Moran have launched a brand new invoice, the Strengthening Company Frameworks for Enforcement of Cryptocurrency (SAFE) Act. What does the invoice cowl? Learn the total story.
