Yesterday the U.S. Federal Reserve published two notes relating to banks engaging in novel technologies. One covers state banks involved in stablecoins and the other is much broader establishing a new “Novel Activities Supervision Program” (Progam). Three of the four areas of the new Program’s activities relate to crypto and DLT.
One of the activity groups targets the more general use of DLT for tokenization of securities or other assets and deposit tokens. A second collection of activities directly relates to crypto, whether it’s providing custody, crypto-backed loans or issuing stablecoins. And the third category relates to banks like the (shuttered) Silvergate and Signature which had concentration risks by providing traditional banking services to crypto-asset related entities.
The Fed acknowledges the purpose of the program is to expand its technical expertise and to better understand the risks to establish appropriate regulations. It will notify banks that will be included in the Program.
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