Fed adds a new layer of bureaucracy for US banks engaging in crypto asset activities

The US Federal Reserve Board issued a letter Tuesday to its supervisory officers, employees and the banks they supervise concerning actions with crypto belongings. The letter covers the preliminary steps a financial institution should undergo earlier than partaking in actions with crypto and instructs banks to inform the board earlier than continuing with these actions.

The letter, signed by the administrators of the regulatory and group affairs divisions, applies to all banks supervised by the Fed with no threshold of minimal belongings. It begins with a warning concerning the dangers related to crypto, particularly mentioning evolving know-how and its governance, Anti-Cash Laundering and transparency and the steadiness of belongings comparable to stablecoin.

The Fed is monitoring banks’ actions, the letter famous:

“Given the heightened and novel dangers posed by crypto-assets, the Federal Reserve is intently monitoring associated developments and banking organizations’ participation in crypto-asset-related actions.”

It went on to remind banks that they should make ample threat administration preparations for actions with crypto belongings. It additionally advisable checking state and federal legal guidelines on the legality of their plans and required filings, mentioning the Financial institution Holding Firm Act, the House House owners’ Mortgage Act, the Federal Reserve Act and the Federal Deposit Insurance coverage Act, specifically.

Associated: Portuguese banks shutting crypto accounts citing threat administration issues

The letter’s actual name to motion was the instruction that banks ought to notify their Fed supervisory contacts upfront of their deliberate actions with crypto. Banks which can be already engaged in such actions ought to present immediate retrospective notification in order that they will obtain suggestions.

An accompanying assertion said a press release on crypto asset coverage was supplied final yr after an interagency “coverage dash” with the Federal Deposit Insurance coverage Company (FDIC) Workplace of the Comptroller of the Forex (OCC).

The Fed letter comes on the heels of pointers for reserve banks opening Federal Reserve accounts for “blockchain banks,” amongst different organizations.

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