Fed policy to align bank oversight could limit crypto activities by state banks
The USA Federal Reserve Board announced Jan. 27 that it was issuing a coverage assertion on limitations on banks. The coverage seeks to create a degree enjoying subject and restrict regulatory arbitrage for state banks with deposit insurance coverage, state banks with out deposit insurance coverage and nationwide banks, that are overseen by the Workplace of the Comptroller of the Foreign money (OCC), by permitting them the identical scope of permissible actions.
The brand new coverage will restrict the actions of state banks by not permitting them to have interaction in actions not permitted by nationwide banks except state laws permits it. Within the Federal Register notice, the assertion particularly discusses crypto at size. It said:
“The Board has not recognized any authority allowing nationwide banks to carry most crypto-assets […] As principal in any quantity, and there’s no federal statute or rule expressly allowing state banks to carry crypto-assets as principal. Due to this fact, the Board would presumptively prohibit state member banks from partaking in such exercise beneath part 9(13) of the [Federal Reserve] Act.”
The discover additionally stated that state banks have proposed issuing “greenback tokens” — that’s, stablecoins — and people banks now shall be topic to OCC interpretative letters 1174 and 1179, as are nationwide banks. It added:
“The Board typically believes that issuing tokens on open, public, and/or decentralized networks, or comparable methods is very prone to be inconsistent with secure and sound banking practices.”
The assertion was issued on the identical day that the Fed rejected the appliance of Wyoming’s Custodia Financial institution for Federal Reserve System membership.
Associated: OCC makes its workers out there for fintech-related discussions
The Fed beefed up scrutiny on banks partaking in crypto actions in August 2022, when it issued a letter requiring the banks it oversees to reveal plans that embrace crypto, with a reminder to make sure sufficient threat administration. The letter utilized retrospectively to banks already energetic in crypto.
@federalreserve points coverage assertion to advertise a degree enjoying subject for all banks with a federal supervisor, no matter deposit insurance coverage standing: https://t.co/ms40zhoYUY
— Federal Reserve (@federalreserve) January 27, 2023