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Fed Ends Supervisory Program for Banks’ Crypto Activities

Key Takeaways:

  • Federal Reserve ends its program overseeing banks’ crypto activities.
  • Oversight shifts to regular supervisory processes.
  • Potential reduction in compliance costs for banks.

The Federal Reserve has ended its Novel Activities Supervision Program, returning banks’ crypto oversight to regular supervision.

This change signals a shift in how U.S. banks handle crypto assets, integrating supervision into the Fed’s existing procedures.

The Federal Reserve’s Announcement

The Federal Reserve announced the conclusion of its
Novel Activities Supervision Program,
which monitored banks’ involvement in crypto activities. The program, initiated by the Federal Reserve Board, is now integrated into regular procedures, suggesting the Fed’s teams are equipped to handle these responsibilities.

Background of the Supervisory Changes

Michael Barr, Vice Chair for Supervision, led efforts to create the program under President Biden. The decision signifies confidence in the Fed’s standard teams to supervise digital assets without specialist oversight, impacting banks dealing with BTC, ETH, and stablecoins.

Potential Impact on Banks

Banks may experience lower oversight costs and streamlined processes due to this shift. The decision could affect compliance procedures, potentially encouraging more crypto activity under established risk frameworks.

Financial and Regulatory Impacts

Financial impacts include a more integrated regulatory approach, with supervision following existing guidelines rather than bespoke requirements. Past adjustments like this have boosted institutional engagement in blockchain technologies and cryptocurrencies.

Industry Insights

Industry experts note possible benefits from reduced regulatory barriers. Market participants await further updates from Fed statements and institutional investors observing policy changes. This move highlights regulatory adaptation to rapidly evolving financial technologies.

“The Federal Reserve Board on Friday announced that it will sunset its novel
activities supervision program and return to monitoring banks’ novel activities through the
normal supervisory process…” —
Federal Reserve, Press Release

Conclusion

The changes align with a broader strategy of integrating novel financial technologies into existing banking frameworks, as highlighted in the recent
policy changes for banking institutions announced by the Federal Reserve Board.

Disclaimer:

The content on nftenex.com is provided for informational purposes only and should not be considered financial or investment advice. Cryptocurrency investments carry inherent risks. Please consult a qualified financial advisor before making any investment decisions.

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