An innovative approach to regulating the crypto world by the US Fed
The Federal Reserve has announced its intention to expand its oversight of crypto-related activities at banks through an innovative asset oversight program. This program aims to improve oversight of activities in the crypto space and the application of distributed ledger technology. The goal is to ensure that banks engaging in these new activities do so safely and securely, while also balancing financial innovation and safeguarding the banking system.
The scope of the Fed’s oversight
The program will cover various aspects of the crypto space, including custody of crypto-assets, crypto-collateralized lending, trading facilitation, and the issuance or distribution of stablecoins and tokens. It extends its jurisdiction to both state banks and traditional banking institutions participating in cryptocurrency-related initiatives. The program will include specialized experts working alongside existing teams to supervise banks engaged in these activities.
A risk-based approach to supervision
The intensity and depth of supervision will be tailored to each bank’s engagement in new activities, recognizing that not all banks will perform the same level of innovative activities. This approach reflects the diverse nature of banking entities and their involvement in emerging technologies.
Conclusions about the FED’s intentions
The Federal Reserve’s decision to expand supervision of crypto activities reflects the evolving nature of the financial sector. Proactive and adaptive regulation will be crucial in harnessing the potential benefits of cryptocurrencies and distributed ledger technology while mitigating risks. The success of this program depends on collaboration, expertise, and a commitment to a secure and innovative future in the financial sector.
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