Fed said in a statement, “Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.”
On Monday, the United States Federal Reserve Board announced that it has published its final guidelines on how crypto banks are to be granted master accounts needed to transact directly with the Fed and the broader global banking system.
The Reserve Bank refers to these firms as “institutions offering new types of financial products or with novel charters.” Still, it is also understood to apply to crypto firms making moves to transact without an intermediary.
Vice Chair Lael Brainard said,
“The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services to support a safe, inclusive, and innovative payment system.”
The guidelines were first proposed in May 2021, with a supplemental proposal released in March. The final guidelines, which come into force after their publication in the Federal Register, are similar.
The Fed, in a statement,
“Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.”
The new guideline creates a three-tiered review framework with the level of due diligence to be provided based on the applicant's risk level. Hence, they will evaluate applicants based on the type of financial institution it applies to.
Tier 1 would be insured federally; Tier 2 would also be federally insured though “subject to prudential supervision by a federal banking agency”; and Tier 3 firms are “not federally insured and not subject to prudential supervision by a federal banking agency.”
The Fed acknowledged the potential opportunities cryptocurrencies afford but stressed that institutions must have systems in place to ensure that the volatile nature of crypto does not threaten the safety or consumer protection.
