Benzinga - The U.S. Federal Reserve is ramping up its oversight of banks' activities in the digital asset space, signaling a broader effort by American regulators to limit the banking industry's interactions with cryptocurrencies.
The central bank revealed the launch of a program dedicated to monitoring digital assets within the financial entities it oversees.
This comes after numerous cautions from regulatory agencies over the past year, emphasizing the potential hazards linked to crypto dealings.
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The program's primary focus will be on examining banks' direct involvement in digital assets and their collaborations with fintech firms that provide these services to bank customers.
Elaborating on the program's objectives, the Federal Reserve mentioned,
“The goal of the novel activities supervision program is to foster the benefits of financial innovation while recognizing and appropriately addressing risks to ensure the safety and soundness of the banking system.”
Additionally, the central bank has mandated that state-chartered banks secure approval from the Federal Reserve prior to executing transactions using stablecoins.
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This new rule could influence the operational plans of banks situated in states with a favorable stance towards cryptocurrencies.
These state-regulated banks are expected to implement robust measures to address liquidity, cybersecurity, and potential illegal funding concerns.
They are also tasked with ongoing surveillance of these areas.
Furthermore, before delving into specific stablecoin-related activities, these banks are required to liaise with the Federal Reserve and await official regulatory consent.
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