The US Federal Reserve has introduced the Novel Activities Supervision program, aimed at overseeing the involvement of banks in crypto-related endeavors, with a particular focus on ensuring the security of stablecoins. This initiative’s primary objective is to provide oversight of banks’ cryptocurrency activities, encompassing aspects such as custody, lending, trading, and the creation or distribution of digital assets.
Before engaging in cryptocurrency-related operations, the Federal Reserve will offer guidance to banks to ensure they are well-prepared. The Federal Reserve has clarified that the purpose of this program is to encourage the advantages of financial innovation while also acknowledging the potential risks associated with cryptocurrency involvement.
This program will operate within the existing supervisory framework of the US Federal Reserve. It’s important to note that this new initiative introduced by the Federal Reserve does not introduce any additional or altered regulations for banks dealing with cryptocurrency within the United States.
Regarding the supervision of stablecoins, the Federal Reserve has outlined guidelines that state banks must adhere to before participating in activities involving stablecoins. These banks are required to demonstrate to Federal Reserve supervisors that they have implemented adequate safeguards for stablecoins.
Examining the regulatory landscape of the cryptocurrency industry in the US reveals a complex environment. This complexity has led various participants in the crypto space to contemplate relocating their operations to regions more accommodating to cryptocurrencies.
In recent months, regulatory bodies such as the US Commodities and Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC) have taken action against prominent players in the cryptocurrency industry. Notable entities like Coinbase and Binance have faced regulatory scrutiny from these institutions and others.