On August 16, 2022, the Federal Reserve issued a Supervisory Letter regarding the engagement in crypto-asset-related activities by Federal Reserve-Supervised banking organizations. In its letter, the Federal Reserve reminded banking organizations of the risks posed by crypto-assets as well as provided instructions on the steps to be taken by any banking organization engaging or seeking to engage in crypto-asset-related activities.
According to the Federal Reserve, although the crypto-asset sector presents potential opportunities to banking organizations, their customers, and the overall financial system, it may also pose risks related to the following:
Technology and operations;
Anti-money laundering and countering of financing of terrorism;
Consumer protection and legal compliance; and
Financial stability.
The Federal Reserve is closely monitoring related developments and banking organizations’ participation in crypto-asset-related activities. Through its letter, the agency provides instructions to Federal Reserve-supervised banking organization on the steps that they need to take prior to engaging in crypto-asset-related activities, including:
A supervised banking organization must ensure that such activities are legally permissible. If any supervised banking organization has questions regarding the permissibility of any crypto-asset-related activities or about the applicability of any filing requirements, it should consult its lead supervisory point of contact at the Federal Reserve.
A supervised banking organization should notify its lead supervisory point of contact at the Federal Reserve. Any supervised banking organization that is already engaged in crypto-asset-related activities should notify its lead supervisory point of contact at the Federal Reserve promptly regarding the engagement in such activities, if it has not already done so.
In all cases, a supervised banking organization should have in place adequate systems, risk management, and controls to conduct crypto-asset-related activities in a safe and sound manner and consistent with applicable laws, including applicable consumer protection statutes and regulations.
The Supervisory Letter can be found here.
