US Federal Reserve Board Issues Policy Statement That Limits Banks’ Crypto Related Activities – Regulation Bitcoin News

The US Federal Reserve said on Jan. 27 that both insured and uninsured banks will be restricted from certain activities, including those related to crypto assets. The board’s latest action does not prevent state member banks or prospective applicants from offering crypto custody services.

Regulated arbitrage restrictions

The U.S. Federal Reserve has said that both insured and uninsured banks under its supervision are “subject to the same restrictions on activities, including new banking activities such as crypto-related activities.” issued a policy statement.

The statement also clarifies that the institution is subject to restrictions “for certain activities” under the auspices of the Office of the Comptroller of the Currency (OCC). By imposing restrictions on the activities of financial institutions, the Board not only attempts to “promote a level playing field,” but also aims to “limit regulatory arbitrage,” the statement said.

The policy statement, which will become effective upon publication in the Federal Register, requires banks to ensure that their activities are conducted in a fair and “safe and sound manner.” This can be achieved by having risk management processes, internal controls and information systems in place.

National member banks are not precluded from providing cryptocurrency custody services

As to why it decided to issue the policy statement, the Federal Reserve said it has been receiving an increasing number of inquiries and proposals from financial institutions wanting to engage in non-traditional activities.

In recent years, the Board has received many inquiries, notices and proposals from banks regarding possible involvement in novel and unprecedented activities, including those related to crypto-assets. In response, the Board’s statement specifies how it evaluates such investigations, consistent with long-standing practice.

Meanwhile, the statement clarified that the board’s latest action does not prevent state member banks or prospective applicants from offering cryptocurrency custody services. This is only permitted if “done in a safe and sound manner and in compliance with consumer, anti-money laundering and terrorist financing laws”.

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Terrence Jimwala

Terence Zimwara is an award-winning journalist, author and writer from Zimbabwe. He has written extensively on the economic problems of several African countries and how digital currencies can provide an escape route for Africans.

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