FRB Crypto-Activity Constraints

Reflecting the concerns voiced in a recent executive order from President Biden and a subsequent request for views from Treasury, the Federal Reserve has joined the OCC in demanding prior notice from banking organizations that wish to undertake cryptoasset activities. The OCC also warned national banks already engaged in these activities to ensure that they are safe and sound, but the Fed has gone farther. It also demands that state member banks and BHCs already engaged in this sector notify their lead supervisor and ensure that these activities meet safety-and-soundness, compliance, consumer-protection, and other standards. As with the Board’s new payment-system guidelines, Reserve Banks may interpret these cryptoasset thresholds differently, perhaps leading to a patchwork of activities across the banking system.