The US Federal Reserve is establishing a novel supervisory division dedicated to overseeing intricate technological collaborations between financial institutions and non-banks, crypto-related operations, and the adoption of blockchain solutions.
According to the Federal Reserve, the primary objective of the recently introduced "innovative activities monitoring initiative" is to promote the advantages of financial advancement while mitigating potential risks to uphold the stability and robustness of the banking system.
The initiative will extensively investigate integrated and open banking alliances, where non-banking entities utilize automated API-based access to a bank's infrastructure to offer banking products.
Furthermore, the oversight will encompass activities like safeguarding crypto assets, providing loans backed by cryptocurrencies, facilitating crypto asset trading, and participating in the issuance or distribution of stablecoins or dollar tokens.
Traditional banks extending customary financial services, such as deposits, payments, and loans to crypto-related businesses and fintech companies, should anticipate heightened regulatory scrutiny.
This endeavor will be supplemented by vigilant supervision of the experimentation and adoption of distributed ledger technology across various applications, including the issuance of dollar tokens and the tokenization of securities and other assets.
Additionally, the Board has supplied additional guidelines outlining the process state banks must follow before engaging in specific dollar token or stablecoin undertakings. This entails demonstrating the establishment of suitable safeguards to execute such activities in a secure and prudent manner.