The Fed is creating a new supervisory program to monitor the activities of the banks it oversees related to cryptocurrencies, blockchain technology.
State banks that are members of the US Federal Reserve System should receive a prudent no objection from the Fed before issuing, holding, or trading in dollars used to facilitate payments, such as stablecoins, the central bank said in a new follow-up letter on Tuesday.
The Fed also said it is creating a new supervisory program to monitor the activities of the banks it oversees related to cryptocurrencies, blockchain technology, and non-bank technology-enabled partnerships. customers, in an effort to supplement existing monitoring processes and strengthen technology monitoring. activities.
The new notices, sent to supervisors and reviewers at the Federal Reserve and member national banks on Tuesday, come just a day after payments giant PayPal announced it would roll out created its own stablecoin, a cryptocurrency typically pegged to a traditional asset. usually US dollars.
Previous attempts by major mainstream companies to launch stablecoins have been met with stiff opposition from financial regulators and policymakers. Plans by Meta, and later Facebook, in 2019 to launch a stablecoin, Libra, fell through after regulators raised concerns that it could disrupt financial stability global mainstream.
According to the Fed, in order for banks to receive written no objection to engaging with stablecoins, banks must demonstrate adequate risk management, including having systems in place to identify and monitor any potential risks, including cyber security and illegal financial threats.
The Fed said that after receiving a written no objection, member country banks engaged in dollar-related activities will continue to be subject to prudential supervision as well as strengthen supervision of activities. there.