August 9, 2023

US Federal Reserve Launches Program To Oversee Risks Related To Crypto

US Federal Reserve

US Federal Reserve

The Federal Reserve of the United States has introduced the “Novel Activities Supervision Program” to oversee and mitigate the potential risks associated with cryptocurrency and other related technologies used by banks under the supervision of the Fed.

In a statement, the Federal Reserve said the program aims to promote innovative financial services that enhance accessibility and delivery while also safeguarding bank customers through effective regulation and supervision, according to BeInCrypto. It targets ensuring banking stability in the face of ongoing crypto and digital technology developments.

Given the novelty of these activities, they may create unique questions around their permissibility, may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system,” the statement read.

It mentioned that activities like holding and trading cryptocurrencies, giving loans backed by cryptos, and creating stablecoins and dollar tokens should be done with proper safeguards. State banks should also follow these protocols before getting involved in such activities.

It mentioned that it would conduct regular reviews of banking organizations that use blockchain and crypto technologies. If necessary, specific organizations may be requested to undergo a review.

The current supervisory teams of the Fed will be in charge of overseeing and reviewing the new activities that supervised banks undertake through the program. The Federal Reserve will regularly assess and revise the list of banking organizations that need to undergo an examination of new activities under the program, and these organizations will be informed accordingly.

It is worth noting that the FBI warned about a rising trend of financial fraud in the NFT community. Scammers are pretending to be legitimate NFT developers and exploiting people who are eager to obtain these assets on the internet. It issued a warning about deceptive individuals who use different tactics to gain access to NFT developer social media accounts or create fake accounts that look like real ones.

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