© Reuters. FILE PHOTO: The U.S. Federal Reserve constructing in Washington, D.C./File Picture
By Hannah Lang
(Reuters) -State banks which are a member of the U.S. Federal Reserve system ought to receive a written supervisory nonobjection from the Fed earlier than issuing, holding or transacting in greenback tokens used to facilitate funds, comparable to stablecoins, the central financial institution mentioned in a brand new supervisory letter Tuesday.
The Fed additionally mentioned it’s creating a brand new supervisory program to supervise the actions of the banks it supervises associated to cryptocurrency, blockchain expertise and tech-driven nonbank partnerships, with the goal of complementing its present supervisory course of and strengthening the oversight of tech-driven actions.
The brand new bulletins, which had been despatched Tuesday to supervisory and examination workers at Federal Reserve banks and state member banks, comes only a day after funds large PayPal (NASDAQ:) introduced it could launch its personal stablecoin, a sort of cryptocurrency usually pegged to a standard asset, usually the U.S. greenback.
Prior makes an attempt by main mainstream firms to launch stablecoins have met fierce opposition from monetary regulators and policymakers. Meta’s, then Fb (NASDAQ:), 2019 plans to launch a stablecoin, Libra, had been foiled after regulators raised fears it might upset international monetary stability.
For banks to obtain a written nonobjection to have the ability to have interaction with stabelcoins, banks ought to display applicable threat administration, together with having methods in place to determine and monitor any potential dangers, together with cybersecurity and illicit finance threats, in keeping with the Fed.
After receiving a written nonobjection, state member banks partaking in greenback token-related actions will proceed to be topic to supervisory evaluate in addition to heightened monitoring of these actions, the Fed mentioned.
