The US Federal Reserve (Fed) has recently announced the launch of a supervisory program aimed at overseeing financial institutions involved in cryptocurrency-related activities.
This proactive step by the Fed underscores its commitment to ensuring the safety and soundness of the banking system amidst the evolving landscape of digital assets.
The newly introduced Fed supervisory program is designed to closely monitor and regulate financial institutions engaging in various crypto-related activities, including trading, custody, lending, and payments.
Furthermore, the program will extend its focus to encompass activities related to blockchain technology and non-bank technology partnerships.
According to the Fed’s directives, state member banks will be required to obtain written approval from the Federal Reserve before participating in any activities involving dollar tokens, including issuance, holding, or transactions.
In an official statement, the Federal Reserve Board elaborated on its approach to overseeing new activities within the banks under its purview.
These activities encompass intricate technology-driven collaborations between non-bank entities and financial institutions, with the objective of delivering innovative banking services to customers.
Additionally, the statement highlights the inclusion of cryptoassets and endeavors involving distributed ledger or “blockchain” technology in the scope of the new activities supervision program.
The primary objective of this supervisory initiative is to strike a balance between fostering financial innovation and managing associated risks.
By ensuring the safety and soundness of the banking system, the Federal Reserve aims to provide a conducive environment for the continued evolution of financial services and related technologies.