The U.S. Federal Reserve Board announced that it reached a consensus on the criteria reserve banks must take into account when evaluating requests for Fed accounts by crypto banks.
Guidelines were first put up in May 2021, and an updated plan was made public in March. The final regulations are “substantially similar” to them and take effect after being published in The Federal Register.
Crypto banks subject to Fed oversight
The Fed stated the following:
“Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review. In response to public comments, the tiered review framework in the final guidelines was refined to provide more comparable treatment between non-federally-insured institutions chartered under state and federal law.”
The framework was improved to ensure that non-federally insured institutions chartered under state and federal law received more similar treatment.
A long time coming
The Fed’s delayed approach to allowing crypto banks access to Federal Reserve accounts, also known as “master accounts,” has long frustrated crypto bankers.
In a statement, Federal Reserve Bank Governor Michelle Bowman cautioned that the new standards are merely the first step toward providing a transparent process. She said that there is a risk that this publishing would create the impression that reviews will now be completed in a faster timeframe.
In 2019, Wyoming issued regulations allowing “blockchain banks.” Digital asset Custodia Bank, based in Wyoming, filed a lawsuit against the Federal Reserve Bank of Kansas City and the Federal Reserve Board of Governors in June, alleging that the 19-month wait time for a master account surpassed the legal threshold for response time.
The Lummis-Gillibrand Responsible Financial Innovation Act would impose guidelines on how the Fed must respond to requests for master accounts.