The US Federal Reserve has announced its plans to establish a comprehensive supervisory program aimed at overseeing financial institutions involved in various cryptocurrency-related activities.
This development comes as the cryptocurrency landscape continues to evolve and regulatory authorities seek to strike a balance between promoting innovation and ensuring the stability of the financial system.
The newly unveiled Federal Reserve supervisory program will specifically target financial institutions engaged in a range of crypto-related endeavors, including trading, custody, lending, and payments.
Moreover, the program is set to encompass activities linked to blockchain technology and non-bank technology partnerships.
One notable requirement outlined by the Federal Reserve is that state member banks must obtain written approval before engaging in transactions involving dollar tokens.
This step underscores the importance of regulatory oversight and risk mitigation in the realm of cryptocurrency operations.
The Federal Reserve Board has shared a comprehensive statement detailing the scope and objectives of the program.
The statement highlights that the initiative aims to foster the benefits of financial innovation while maintaining a vigilant approach to addressing potential risks. This dual focus aims to uphold the soundness and security of the broader banking system.
To effectively implement this supervisory program, the Federal Reserve plans to integrate it into its existing audit processes.
In practice, program specialists will collaborate closely with the current audit teams to assess and monitor banks participating in new and innovative activities within the crypto space.
In addition to the program’s overarching framework, the Federal Reserve has outlined specific procedures that state-regulated banks must follow before embarking on certain dollar token or stablecoin operations.
This includes demonstrating to Federal Reserve supervisors that appropriate safeguards are in place to ensure the safe and sound operation of such activities.
