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Fed issues guidance on banks’ engagement with crypto activities
The Federal Reserve on Tuesday issued additional information for Board supervised banks seeking to engage in crypto-asset-related activities. Although the guidance is directed toward banks, it helps ensure that supervisory expectations for firms with crypto-centric business models are appropriately aligned to the risks associated with novel activities.
The Fed pointed out that it is closely monitoring banking organizations’ participation in crypto-related activities given the increased risks surrounding these activities. The guidance also tells banks that “prior to engaging in any crypto-asset-related activity, a supervised banking organization must ensure such activity is legally permissible and determine whether any filings are required under applicable federal or state laws.”
Of note, the Fed also acknowledges the potential risks of widescale stablecoins stating that “if adopted at large scale, could also pose risks to financial stability including potentially through destabilizing runs and disruptions in the payment systems.”
NAFCU has engaged with several agencies including the Fed, Treasury Department, and Commerce Department to share credit union feedback and concerns around digital asset regulation.
The association has offered several high-level principles to incorporate in a digital asset regulatory framework which includes setting a level playing field for credit unions, banks, and other financial companies seeking to engage with digital asset technologies, applying consumer protection laws to entities facilitating consumer engagement with digital assets, and supporting responsible innovation within the credit union industry.
NAFCU will monitor this topic as the discussion about CBDC and digital assets continues.