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The US Federal Reserve Bank (Fed) has provided additional information for supervised banking organisations engaging or seeking to engage in crypto-asset-related activities. In contrast, the crypto markets have presented opportunities; they also carry various risks including but not limited to cyber security, money laundering, consumer protection, legal compliance, and technology risks.
As per the Fed press release, banking organisations must demonstrate their ability to manage the risks posed by crypto-related activities. The press release stated that: “A supervised banking organization should, prior to engaging in these activities, have in place adequate systems, risk management, and controls to conduct such activities in a safe and sound manner and consistent with all applicable laws, including applicable consumer protection statutes and regulations”.
Banking organisations are also required to notify the Fed if they are engaging in or are seeking to engage in crypto-related activities. The Fed release emphasised that: “Any supervised banking organization that is already engaged in crypto-asset-related activities should notify its lead supervisory point of contact at the Federal Reserve promptly regarding the engagement in such activities, if it has not already done so”.
The press release advised supervised banking organisations to only engage in legally permissible crypto-related activities under applicable state and federal laws and to fulfil any reporting requirements.
 
 
On August 15, 2022, the Federal Reserve Board announced the final guidelines that Reserve Banks can use for reviewing requests for access to Federal Reserve accounts and payment services. “The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system,” said Vice Chair Lael Brainard.
In June 2022, Custodia bank sued the Federal Reserve Board and the Federal Reserve Bank of Kansas City over a delayed application for a master account. The master account provides banks with direct access to the Fed’s payment systems, enabling them to offer various financial and new products and services at a lower cost.
The recent additional information and the final guidelines from the Fed demonstrate that the crypto markets cannot simply be ignored. Oversight from regulators will be required for responsible growth and innovation in the crypto markets.
Source: https://zycrypto.com/fed-issues-additional-information-for-participation-in-the-crypto-markets/