The Federal Reserve has announced measures to oversee new activities, including those involving crypto and other emerging asset classes.
It also discusses the use of distributed ledger technology, the most recent move by US regulators to limit banks’ participation in cryptocurrencies, to strengthen regulation of banks’ participation in digital property. This move has the potential to have a significant impact on the financial system.
According to a public definition of the goals of this system, banks that are participants in the Federal Reserve System should obtain written regulatory approval from the Fed prior to issuing, holding, or transacting in dollar-based tokens used to facilitate funds, such as stablecoins.
Such banks must demonstrate that they have taken reasonable precautions to reduce risks, including those related to liquidity, cybersecurity, and illegal financial risks, and that they continuously monitor these areas.
Additionally, regulators will strengthen their control of recent activities like stablecoin/USD token issuance or distribution, crypto asset custody, crypto collateralized lending, enabling the buying and selling of crypto assets, and so on.
In order to provide customers with financial services, the proposal may also emphasize distributed ledger technology (DLT) and other technology-driven partnerships with non-bank companies. The Fed announced that it was working on a fresh regulatory strategy.
In order to supplement its current supervisory procedures and improve technology-driven regulation, to monitor the actions of banks within its system with relation to cryptocurrency, blockchain expertise, and non-bank collaborations.
