The Federal Reserve Board stated on January 27 that both insured and uninsured banks are subject to restrictions on certain activities, including those related to crypto assets. The Board’s latest action does not preclude state member banks or prospective applicants from offering safekeeping services for crypto assets.
Limiting Regulatory Rulings
The Federal Reserve Board has issued a new policy statement that both insured and uninsured banks under its supervision are “subject to the same restrictions on activities, including new banking activities such as crypto asset-related activities.”
Thestatement also clarifies that financial institutions are subject to restrictions “with respect to certain activities” under the supervision of the Office of the Comptroller of the Currency (OCC). By imposing restrictions on the activities of financial institutions, the Board is not only attempting to “promote a level playing field,” according to the statement, but also to “limit regulatory arbitrage.”
The policy statement, which takes effect upon publication in the Federal Register, urges banks to ensure that their activities are conducted in a “safe and sound manner.” This is accomplished by having risk management processes, internal controls, and information systems in place.
State member banks are not precluded from providing crypto asset custody services
In explaining why it decided to issue a policy statement, the Federal Reserve said it has received an increasing number of inquiries and proposals from financial institutions wishing to engage in non-traditional activities.
In recent years, the Board has received numerous inquiries, notices, and proposals from banks regarding the possibility of engaging in novel and unprecedented activities involving crypto assets. In response, this statement specifies how we will evaluate such inquiries, consistent with our longstanding practice.
On the other hand, the statement clarifies that the Board’s current action does not preclude state member banks or prospective applicants from providing custody services for crypto assets. This is permissible only if done “in a safe and sound manner and in compliance with consumer, anti-money laundering, and anti-terrorist financing laws.”
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