On January 27, 2023, the Federal Reserve Board issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement makes clear that uninsured and insured banks supervised by the Board will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities.
Through the policy, the Board makes clear that uninsured and insured banks supervised by the Board would be subject to the limitations on certain activities imposed on national banks, which are overseen by the Office of the Comptroller of the Currency. According to the Board, the equal treatment will promote a level playing field and limit regulatory arbitrage. The policy statement also reiterates that banks must both ensure that the activities they engage in are allowed under the law, and conduct their business in a safe and sound manner. Specifically, a bank should have in place risk management processes, internal controls, and information systems that are appropriate and adequate for the nature, scope, and risks of its activities.
According to the Board’s press release, the Board has received a number of inquiries, notifications, and proposals from banks regarding potential engagement in novel and unprecedented activities, including those involving crypto-assets. Thus, the new policy specifies how it will evaluate such inquiries, consistent with longstanding practice. Nothing in the policy statement would prohibit a state member bank, or an applicant to become a state member bank, once approved, from providing safekeeping services for crypto-assets in a custodial capacity if such activities are conducted in a safe and sound manner and in compliance with consumer, anti-money-laundering, and anti-terrorist-financing laws.
The statement will be effective upon publication in the Federal Register.
The FRB’s press release can be found here.
The Policy Statement can be found here.