Reserve

United

Shyft Network

Elon Musk

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 <p>In a significant move that underscores its commitment to adapting to the evolving financial landscape, the Federal Reserve of the United States has announced its intention to expand its oversight of crypto-related activities within banks.</p> 
 <p>By introducing a “Novel Activities Supervision Program,” the Federal Reserve aims to establish a comprehensive framework to supervise emerging asset classes, including cryptocurrencies. The program will also focus on applying distributed ledger technology (DLT) with “potential impacts on the financial system.”</p> 
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
  <p lang="en" dir="ltr">@federalreserve provides additional information on its program to supervise novel activities in the banks it oversees: https://t.co/6MiItQwO7V</p> 
  <p>— Federal Reserve (@federalreserve) August 8, 2023</p> 
 </blockquote> 
 <p></p> 
 <p>This move comes as the financial landscape undergoes a profound transformation due to the growing influence of cryptocurrencies and blockchain technology. Regulators, recognizing the need for innovation and safety, are increasing their efforts to guarantee that the digital world remains secure and inventive.</p> 
 <p>Based on the official statement, the core objective of the Federal Reserve’s novel program is to enhance oversight of activities that fall outside the scope of traditional banking regulations. This comprehensive endeavor will include a variety of aspects of the cryptocurrency landscape, such as custody options for digital assets, loans backed by digital assets, and facilitating trading.</p> 
 <p>The initiative will also involve itself with the use of DLT for the creation and distribution of stablecoins and tokens pegged to the dollar. Moreover, the program extends its reach to collaborations between banks and non-banking entities to deliver financial services to customers.</p> 
 <p>The traditional banking system, which it governs and supervises, has become increasingly intertwined with the crypto industry, which has risen in importance and value over time.</p> 
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
  <p lang="en" dir="ltr">2/ @wef also insists that regulating crypto's diverse elements, from self-hosted wallets to #decentralized exchanges, is complex.&nbsp;👀</p> 
  <p>And, it believes that as the #crypto industry intertwines with traditional finance, managing potential contagion risks is essential.</p> 
  <p>— Shyft Network (@shyftnetwork) May 26, 2023</p> 
 </blockquote> 
 <p></p> 
 <p>The Federal Reserve acknowledges that the rapid evolution of cryptocurrencies and DLT introduces complexities that existing supervisory methods may not adequately address. This potentially poses risks to the financial system’s stability, which the Federal Reserve is determined to prevent.</p> 
 <h2 id="federal-reserve-to-balance-innovation-and-security">Federal Reserve to Balance Innovation and Security</h2> 
 <p>Unlike other regulatory and oversight efforts, the Federal Reserve has presented its initiative as one to balance innovation with security. The oversight program, therefore, aims to create an environment in which financial institutions can explore opportunities in the cryptocurrency domain while maintaining overall stability and security.</p> 
 <p>The US central bank said:</p> 
 <blockquote> 
  <p>“The Program will help ensure that regulation and supervision allow for innovations that improve access to and the delivery of financial services, while also safeguarding bank customers, banking organizations, and financial stability.”</p> 
 </blockquote> 
 <p>While the exact list of institutions subject to the Federal Reserve’s supervision remains to be determined, the program’s scope is designed to cover a wide array of financial entities.</p> 
 <p>The list could include state banks involved in activities related to distributed ledger technology which have been required to get the Federal Reserve’s written consent before utilizing DLT or “similar technologies to conduct payments activities as principal, including by issuing, holding, or transacting in dollar tokens.”</p> 
 <p>The initiative will also entail traditional banking institutions participating in crypto-related endeavors like lending, payments, or tokenization. “This letter applies to all banking organizations supervised by the Federal Reserve, including those with $10&nbsp;billion or less in consolidated assets,” said the Federal Reserve.</p> 
 <p>According to the Federal Reserve, the supervision program’s implementation will involve integrating specialized experts into the current supervision teams. “The Program will engage broadly with external experts from academia and the banking, finance, and technology industries” who will collaborate with existing groups to oversee banks performing activities under this program.</p> 
 <p>Ultimately, the success of this program will require collaboration from the banks involved and, to some degree, the crypto industry. So far, the program has been received with mixed reactions. On one end, some believe this is the Federal Reserve’s move to suppress crypto’s growth.</p> 
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
  <p lang="en" dir="ltr">they want to discourage innovation/risk taking, suppress fintechs that are gaining market share by banking riskier clients, and create barriers to entry to consolidate the industry.</p> 
  <p>— nic 🌠 carter (@nic__carter) August 8, 2023</p> 
 </blockquote> 
 <p></p> 
 <p>Conversely, some are positive that the move will provide guardrails to the crypto industry, which is still mostly unregulated.</p> 
 <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> 
  <p lang="en" dir="ltr">Good step towards stablecoin issuance, and crypto rails becoming more prevalent in our banking system. Clear shift in tone from the powers that be about crypto. Should be bullish for BTC short term as we greater confidence in ETF, but clearly bullish ETH as well given stablecoin… https://t.co/VNIcdSxp7d pic.twitter.com/EoCBb7O3Rm</p> 
  <p>— Avi (@AviFelman) August 8, 2023</p> 
 </blockquote> 
 <p></p> 
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Federal Reserve Expands Crypto Oversight in US Banks

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