Last week, the Federal Reserve Board of the United States focused on banks and cryptocurrency, issuing (or threatening to issue) many clarifications, one of which was long overdue. It announced the completion of the final edition of rules for reserve banks accessing Reserve Bank master accounts and services.
At the same time, the Fed made it plain that traditional banks that want to deal with crypto assets would need to interact with authorities more closely. It is advised that before making such a choice, you review state and federal legislation and tell the Fed supervisory contacts in advance.
These rules for crypto carry the possibility of “the most severe scrutiny,” to which non-federally insured institutions that do not have a holding company subject to Fed monitoring would be vulnerable. It is unknown if crypto banks will eventually gain access to master accounts under the new standards, or how long they will have to wait.
Last week was not only hectic for the United States’ banking regulator. The ECB established the groundwork for the parameters it would evaluate for standardising crypto licencing rules in Europe. It will specifically analyse the economic models of crypto enterprises, internal governance, and “fit and proper” evaluations that apply to licencing other organisations. Furthermore, it would rely on national Anti-Money Laundering (AML) authorities and respective countries’ financial intelligence units to supply data needed to identify possible hazards.
Luis Carlos Reyes, the chairman of Colombia’s Tax and Customs National Authority, stated that the government will strive to develop a digital currency to avoid illicit financial activities such as tax evasion. However, the source did not explain whether the Colombian government intends to introduce a central bank digital currency (CBDC) or an asset-backed national currency comparable to Venezuela’s Petro digital currency scheme.
The Federal Deposit Insurance Corporation has issued stop and desist letters to five firms — FTX US, SmartAssets, FDICCrypto, Cryptonews, and Cryptosec — for allegedly making misleading statements concerning deposit insurance in connection with cryptocurrencies. The agency claims that these organisations deceived the public regarding some cryptocurrency-related goods that are FDIC-insured, and it advises them to “take urgent corrective action to remedy these false or misleading representations.”
The introduction of digital cash in the form of CBDCs looks to be the “sole answer” that will ensure the present monetary system’s “smooth continuance.” At least, that is what ECB analysts conclude after reviewing 150 research articles on the issue. The authors emphasise the necessity of central banks reaching the appropriate degree of CBDC “take-up,” and they also look at potential regulatory action that may help CBDCs accomplish their aims. Previously, the central bank weighed the cross-border payment capabilities of CBDC, Bitcoin, and stablecoin, ultimately favouring CBDC.
- Fed Hints at Master Accounts for Crypto Banks
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