The U.S. Federal Reserve said on April 24 that it has raised a request for banks to provide advance notice before participating in cryptocurrency operations. This is the comprehensive look that cautious policy regulators have taken before using digital assets.
Banks can now engage in cryptocurrency and Stablecoin businesses without the need for special authorization, although they will still be subject to regular supervision.
Trump administrators are ready for crypto campaign promises
The policy shift fulfills U.S. President Donald Trump’s campaign vow to make U.S. cryptocurrency friendly. This completes the restrictions on retreating restrictions on banks that want to participate in legal activities in the blockchain space, according to banking observers.
The Federal Reserve, the same action by the Federal Deposit Insurance Corporation (FDIC) late last month and the Office of the Monetary Audit Body (OCC) earlier that month, is the third of a large banking regulator.
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Previous restrictions have created obstacles for banks
Under the 2023 guidelines since the withdrawal, banks regulated by the Federal Reserve are directed to notify their leading supervisors’ contact points before engaging in any cryptocurrency-related activities.
A series of crises hit the digital currency sector in 2022, prompting regulators to issue warnings about possible dangers to impose restrictions. Litigation between the FDIC and the cryptocurrency exchange shows that few, if any, banks under supervision rarely get approval when making such requests to venture into the cryptocurrency business.
Total crypto market cap at $2.92 trillion on the daily chart: TradingView.com
Fed transfers to standard oversight methods
Bitcoin operations will be screened during the Fed’s regular banking oversight process, rather than requiring special superior notices. The Fed also withdraws its 2023 policy, which restricts banks from participating in stable policies, often called the “dollar token.”
The Fed also withdrew two joint statements issued with other institutions that highlighted the threat of potential fraud, misinformation and unstable currency traffic associated with cryptocurrency companies.
Banking and crypto-type areas may gain
The decision is designed to simplify compliance requirements and provide new opportunities for banks in their crypto assets business. The Fed said in announcing the move that the board will coordinate with institutions whether additional guidance is needed to promote, including the digital asset business.
This is followed by a January decision by the Securities and Exchange Commission to revoke a rule that forces banks to hold cryptocurrencies to classify them as liability.
The Fed said it will continue to focus on the risks associated with digital assets, but through conventional oversight rather than special restrictions.
Featured images from the Manhattan Institute, charts from TradingView
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