Bloomberg News reports that the Federal Reserve’s regulators have given a blunt warning to the banks that are trying to explore new opportunities involving cryptocurrencies. These banks have been asked to find out whether or not these digital tokens are legal or not.
On Tuesday, the central bank released a supervisory letter. It contained recommended measures that Fed lenders oversee must take before being involved in the digital asset market. As a beginning point, the Fed revealed that the companies must inform the regulator before getting engaged in activities that are related to crypto. These companies must also make sure that they adhere to the rules.
The Federal watchdogs have increasingly focused on ensuring that the volatility due to crypto does not adversely impact the financial system on a broader scale. In the meantime, the traditional financial companies intend to grow faster in the asset class segment.
Eric Belsky, who is leading the consumer and community affairs unit, and Michael Gibson, the director of the Federal Reserve’s division of regulation and supervision, revealed in their statement that the emerging crypto asset segment is presenting prospective opportunities to the banking institutes, their clients and the financial system as a whole. However, there is always a chance of risk in financial stability, safety and soundness, and consumer protection.
Bloomberg News reports that at the beginning of this week, the Fed had issued guidance on how to evaluate financial organizations’ applications for using the central bank’s payment services and accounts. One of the hottest topics of political discussion in Washington is related to the fact that crypto firms are pushing for access.
