WASHINGTON—The Federal Reserve wants to know when banks are in the cryptocurrency business. To that end, it has issued additional information for the banks it supervises related to crypto-asset-related activities.
Although the guidance is directed toward banks, it helps ensure that supervisory expectations for firms with crypto-centric business models are appropriately aligned to the risks associated with novel activities, NAFCU noted in its analysis.
According to the Fed, it is closely monitoring banking organizations’ participation in crypto-related activities given the increased risks surrounding these activities. The guidance states that “prior to engaging in any crypto-asset-related activity, a supervised banking organization must ensure such activity is legally permissible and determine whether any filings are required under applicable federal or state laws.”
In addition, the Fed also pointed to the potential risks of widescale stablecoins, stating that “if adopted at large scale, could also pose risks to financial stability including potentially through destabilizing runs and disruptions in the payment systems.”