The FED now requires approval before state banks can issue, hold or transact crypto stablecoin payments, according to a press release today.
The board will supervise novel activities including complex, technology-driven partnerships with non-banks to provide banking services to customers; and activities that involve crypto-assets and distributed ledger or “blockchain” technology.
The statement by the Federal reserve board reads:
“The goal of the novel activities supervision program is to foster the benefits of financial innovation while recognizing and appropriately addressing risks to ensure the safety and soundness of the banking system. The program will be integrated into the Federal Reserve’s existing supervisory processes, with program experts working alongside current supervisory teams to oversee banks engaged in novel activities.”
In addition, the FED also announced Tuesday new rules that state banks must follow before engaging in stablecoin activity. This includes “demonstrating to its Federal Reserve supervisors that it has appropriate safeguards to conduct the activity safely and soundly.”
Over the course of this year, the Federal Reserve has issued more guidance on crypto. It comes as no surprise that the new rules on stablecoins come after PayPal announced its new stablecoin PYUSD.
The program will also focus on state banks’ partnerships with firms that aren’t lenders to provide services to customers. “The goal of the novel activities supervision program is to foster the benefits of financial innovation while recognizing and appropriately addressing risks to ensure the safety and soundness of the banking system,” the Fed said in a statement.