#stablecoins – Federal Financial Analytics

11 08, 2023

FedFin on : Stablecoin/Tokenization Activities

Arezou Rafikian2023-08-11T16:25:47-04:00August 11th, 2023|The Vault|

In conjunction with issuing a new supervisory policy for “novel” activities, the FRB has instituted a new process requiring non-objection letters before state member banks proceed with stablecoin or dollar-tokenization activities. Although the new non-objection process makes it clear that Fed approval will require clear adherence to a raft of policy and legal obligations, the non-objection process clears the way for state member banks to offer products with a growing role in retail and wholesale payment, settlement, and clearing activities.

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

11 08, 2023

CRYPTO45

William Cross2023-08-11T11:46:49-04:00August 11th, 2023|1- Financial Services Management|

Stablecoin/Tokenization Activities

In conjunction with issuing a new supervisory policy for “novel” activities,[1] the FRB has instituted a new process requiring non-objection letters before state member banks proceed with stablecoin or dollar-tokenization activities. Although the new non-objection process makes it clear that Fed approval will require clear adherence to a raft of policy and legal obligations, the non-objection process clears the way for state member banks to offer products with a growing role in retail and wholesale payment, settlement, and clearing activities.

CRYPTO45.pdf…

19 05, 2023

CRYPTO44

Max Camateros-Mann2023-05-19T09:47:04-04:00May 19th, 2023|5- Client Report|

Preemption, SEC Remain Principle Stablecoin Roadblocks

Although there were still considerable party-line differences of opinion on stablecoin legislation, today’s HFSC Digital-Assets Subcommittee hearing suggests that remaining divides are narrowing, increasing the odds of a new federal-regulatory framework. However, this is not to say that HFSC Members will be able to overcome the most partisan differences – the role of the SEC and federal preemption – or that Sen. Brown (D-OH) will agree to yet another regulatory role for the Fed even if he does decide to advance a bill in this arena.

CRYPTO44.pdf…

21 04, 2023

Al042423

Max Camateros-Mann2023-04-21T17:10:10-04:00April 21st, 2023|3- This Week|

Crypto Chaos Unchanged

Working in the shadow of the debt-ceiling crisis and post-SVB policy actions, Congress last week turned back to U.S. crypto policy in hopes of crafting a federal statutory regime at least when it comes to stablecoins. But, as with so much else in this Congress, there are low odds for action even though there is virtually unanimous agreement that there absolutely needs to be some.

Al042423.pdf…

23 03, 2023

DAILY032323

Eliza Allen2023-03-23T17:09:59-04:00March 23rd, 2023|2- Daily Briefing|

OFR Study Predicts Household Gains, Banking Instability From Digital Currencies

A new OFR working paper concludes that full integration of digital currencies into the economy would reduce financial-system volatility and improve household welfare, but also increase the probability of a banking crisis.

HFSC Poses Still Tougher SVB/SBNY Resolution Questions

Following tough GOP letters to the Fed and FDIC earlier this week, HFSC Chairman McHenry (R-NC) and Subcommittee Chair Hill (R-AR) last night sent even sterner missives to Chairman Gruenberg and Secretary Yellen.

Bipartisan Push Begins For CEO Clawbacks

Ahead of its first of many hearings on the collapse of SVB and SBNY, Senate Banking Chairman Brown (D-OH) and Ranking Member Scott (R-SC) today sent letters to the former CEOs of the banks demanding that they answer for the bank failures, noting also that they will be expected to testify before the Committee if they are unable to do so next week.

OFR Blog: CRE, Residential Markets Pose Little Systemic Risk

Despite growing concerns about CRE and even potential systemic risk, an OFR blog post today concludes that neither the residential nor commercial real estate market poses a significant threat to the financial system.

Basel Stands By Its Rules, Contemplates New Supervisory Standards

The Basel Committee’s release following its March 14 meeting unsurprisingly notes the bank failures preceding it just days before, but attributes them principally to poor risk management in the face of rising rates.

GSEs Seek Public Comment on Credit Score Model Transition

The FHFA today announced…

14 02, 2023

FedFin on: Crypto Set For Senate AML, Reserve Rewrite

Arezou Rafikian2023-02-15T16:13:52-05:00February 14th, 2023|The Vault|

Although Chairman Brown (D-OH) remained non-committal on the need for crypto legislation, he emphatically called for reform to protect consumers and investors. Sen. Warren (D-MA) plans to reintroduce bipartisan legislation extending AML requirements to crypto firms, while Sen. Tillis (R-NC) announced that he is working on a bill addressing proof of reserves and asset segregation. Sen. Lummis (R-WY) was not present, but also plans to reintroduce her sweeping crypto bill (see FSM Report CRYPTO28) in this Congress following revisions that reflect…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

14 02, 2023

CRYPTO39

Max Camateros-Mann2023-02-14T16:45:27-05:00February 14th, 2023|5- Client Report|

Crypto Set For Senate AML, Reserve Rewrite

Although Chairman Brown (D-OH) remained non-committal on the need for crypto legislation, he emphatically called for reform to protect consumers and investors. Sen. Warren (D-MA) plans to reintroduce bipartisan legislation extending AML requirements to crypto firms, while Sen. Tillis (R-NC) announced that he is working on a bill addressing proof of reserves and asset segregation. Sen. Lummis (R-WY) was not present, but also plans to reintroduce her sweeping crypto bill (see FSM Report CRYPTO28) in this Congress following revisions that reflect recent developments. Ranking Member Scott (R-SC) seemed open to at least some legislation, but also blasted SEC Chairman Gensler’s enforcement-focused approach. Sen. Smith (D-MN) also reiterated concerns she and Sen. Warren share about crypto assets in the banking system.

CRYPTO39.pdf…

16 11, 2022

REFORM215

William Cross2022-11-22T15:02:46-05:00November 16th, 2022|5- Client Report|

HFSC Session Brings Crypto Action to Fore, “Holistic” Capital Under Scrutiny

HFSC today largely focused bank regulators on the same range of questions posed at yesterday’s Senate Banking session (see Client Report REFORM214). However, Chairwoman Waters (D-CA) emphasized the importance of federal legislation in sharp contrast to Chairman Brown (D-OH), also announcing a hearing in December on FTX. Ranking Member McHenry (R-NC), who will become HFSC chairman in the next Congress, concurred with the chairwoman’s views on the need for digital-finance statutory reform. However, he took strong issue with inter-agency policy with regard to new capital rules, merger restrictions, and third-party relationship constraints. Republican members also targeted Vice Chairman Barr’s holistic capital review, arguing that banks are currently well capitalized and that additional standards would hamper lending. Mr. Barr indicated that an SLR rewrite is part of the holistic review but not immediately necessary to quell Treasury-market volatility or illiquidity. As discussed in more detail below, regulators promised banking-sector crypto rules at least as stringent as Basel’s proposal.

REFORM215.pdf

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12 10, 2022

DAILY101222

Eliza Allen2022-10-12T16:58:59-04:00October 12th, 2022|2- Daily Briefing|

ECB Staff: Retail CBDC Success May Hang on Interest-Rate Inducements

A new paper from European Central Bank staff looks not so much at CBDC policy objectives, but at whether central banks can achieve them and still satisfy the needs of retail depositors and businesses. Based in part on two small, failed CBDC ventures, the paper concludes that CBDC adoption will prove harder than policy focused CBDC analyses suggest.

Barr Accepts Crypto Activities In Banks But Demands New Safety Rules, Consumer Standards

Although he did not adopt Acting Comptroller Hsu’s attack yesterday on cryptoassets, Fed Vice Chair Barr today made it clear that the Fed believes, as it and global regulators repeatedly say, that the same risks should be covered by the same rules. Mr. Barr does believe that cryptoasset activities may be appropriate for banks if appropriate standards and internal controls are in place, noting that the Fed is now moving past its own supervisory guidance (see FSM Report CRYPTO31) to work with the FDIC and OCC to craft additional standards.

IOSCO Releases Global Online Marketing, Enforcement Standards

IOSCO today increased its focus on digitalization, moving away from longstanding edicts regarding monitoring to a set of specific standards for supervision and enforcement. IOSCO urges supervisors to require firms to have online marketing-and-distribution standards as well as protocols governing online onboarding.

Daily101222.pdf…

22 09, 2022

REFORM212

Max Camateros-Mann2022-10-12T17:06:54-04:00September 22nd, 2022|5- Client Report|

HFSC Goes Easy on CEOs

At today’s big-bank oversight HFSC hearing, Committee Democrats focused on each bank’s progress on social issues, such as internal diversity, unionization, and historic roles in financing slavery. Although Chairwoman Waters (D-CA) called for more restrictive merger-approval criteria in her opening statement, Democrats largely left the issue untouched. Ranking Member McHenry (R-NC) framed the hearing as political “theater,” focusing on discrediting capital increases. Committee Republicans also asked CEOs about inflation, fiscal policy, and gun merchant codes. Chairwoman Waters concluded this marathon session by chastising the CEOs for failing fully to answer the questions she posed ahead of the hearing and demanding that they do so in five legislative days.

REFORM212.pdf…