The Federal Reserve Tightens Regulation of Stablecoins
The Federal Reserve of the U.S. has issued new guidelines for national banks regarding the use of stablecoins and other digital assets. Here are the key points:
1. Permission Required: National banks now need to seek permission from the Federal Reserve to engage in any activities related to dollar-pegged digital assets, known as “dollar tokens.”
2. Notification Process: State member banks must notify the Federal Reserve about their intended activities with stablecoins, including issuing, holding, transacting, or testing them. The Federal Reserve may request additional information about the proposed activity.
3. Supervisory Nonobjection: To proceed with using stablecoins, banks must receive a written notification of supervisory nonobjection from the Federal Reserve.
4. Mitigating Risks: Banks seeking nonobjection must demonstrate an effective risk management system and the ability to measure and control the risks associated with stablecoin activities. The Federal Reserve highlights operational, cybersecurity, liquidity, illicit finance, and consumer compliance risks.
5. Evaluation of Laws and Commitment: The Federal Reserve will assess banks’ understanding of relevant laws and their commitment to compliance.
In conclusion, the Federal Reserve’s new guidelines aim to tighten the regulation of stablecoins by requiring permission and ensuring banks mitigate associated risks.
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