State Member Bank Powers

In conjunction with rejecting an uninsured crypto bank’s application for Federal Reserve membership, the Federal Reserve issued a policy statement conforming state member bank powers only to those authorized for national banks even if the state member is an uninsured depository institution. While it is possible for state member banks to gain greater powers following Fed deliberations, the new approach sharply limits the ability of states to empower uninsured charters not only focused on cryptoasset activities, but also other non-traditional ones such as those involved in certain fintech “partnerships.” Payment-system access now will be more circumscribed, limiting the comparative advantage non-traditional charters have or hope to enjoy as well as reducing competitive disparities between state-member and national charters.