Fed Steps up Crypto Oversight
The Federal Reserve has announced the establishment of the Novel Activities Supervision Program, which aims to increase oversight of novel activities by financial institutions. The program will specifically focus on activities related to crypto-assets, distributed ledger technology (DLT), and technology-driven partnerships with nonbanks. The Federal Reserve emphasizes that the program will be risk-focused and will complement existing supervisory processes.
- The program aims to increase oversight of novel activities related to crypto-assets, DLT, and technology-driven partnerships with nonbanks.
- The Federal Reserve states that the program will be risk-focused and complement existing supervisory processes.
- The Federal Reserve Board has released guidelines mandating banks to adhere to certain requirements before engaging in activities involving U.S. dollar stablecoins.
- The guidelines require state banks supervised by the Federal Reserve to demonstrate appropriate safeguards for conducting dollar token or stablecoin activity.
- Paypal recently announced the launch of its U.S. dollar stablecoin, backed by U.S. dollar deposits and similar cash equivalents.
The Federal Reserve’s announcement comes at a time when Congress is considering a stablecoin bill. The Clarity for Payment Stablecoins Act has been passed by the House Financial Services Committee, and Congressman Patrick McHenry emphasizes the need for clear regulations and robust consumer protections in the digital asset market, particularly for stablecoins.
Hot Take
The Federal Reserve’s move to step up crypto oversight reflects the growing importance and potential risks associated with cryptocurrency and stablecoin activities. With the introduction of the Novel Activities Supervision Program and the guidelines for banks, the aim is to ensure the safety and soundness of these activities while fostering innovation in the financial sector. The launch of Paypal’s U.S. dollar stablecoin and the ongoing discussions in Congress further highlight the need for comprehensive regulation in the crypto space to protect consumers and promote market stability.
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