WASHINGTON—The Federal Reserve is starting a new program to oversee banks’ crypto activities, and clarifying that lenders under its authority must get approval before engaging in digital-assets activities.
“The move doesn’t change any rules for crypto banking. Rather, it just defines how the central bank intends to handle its oversight, putting dealings with the crypto sector under the new ‘novel activities supervision program,’ in which the Fed’s specialized experts in digital assets will work alongside the regulator’s regular supervisors,” Yahoo Finance reported.
The Fed also issued a fuller explanation for how the banks it supervises need to get preapprovals for engaging with stablecoins. An institution that’s “issuing, holding or transacting in dollar tokens to facilitate payments” needs to prove to the supervisors beforehand that it can do all of that in a “safe and sound manner” and needs the Fed to formally sign off, according to Yahoo Finance.
Permission Could be ‘Difficult’
“That permission could be difficult to win, because each bank will need to demonstrate it can ‘identify, measure, monitor and control the risks of its activities,’ and the Fed will be looking for any vulnerabilities to money laundering, customer runs and hackers, among other things, Yahoo Finance said.
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