The U.S. Federal Reserve confirms guidelines for crypto banks

The U.S. Federal Reserve Board has concluded tiered guidelines for granting Federal Reserve accounts, with Wyoming’s crypto banks will mostly fall under the most scrutiny.

The United States Federal Reserve Board revealed on Monday that it had finalized its guidelines for the factors reserve banks are to consider when reviewing requests for Federal Reserve accounts and payment services. The final guidelines create a three-tiered review framework with the level of due diligence to be delivered, depending on the applicant’s risk level. 

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These Guidelines were first proposed in May 2021, with an additional proposal released in March, and the final guidelines, which come into force after their publication in The Federal Register, are substantially identical to them.

The Fed conveys in a statement that the institutions that contend in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.

Regardless, it continued, the framework was refined to provide more equivalent treatment between non-federally insured institutions chartered under state and federal law. Non-federally insured institutions that are leased under federal law but do not have a holding company subject to Federal Reserve oversight will be subject to the most rigorous review. Financial institutions must have a Federal Reserve account to access the global payment systems.

The Fed’s slow approach to consenting crypto banks access to Federal Reserve accounts, which are often referred to as master accounts, has long grown hackles among crypto bankers. Wyoming introduced rules to authorize blockchain banks in 2019.

In June, Custodia Bank, a Wyoming-based digital asset Bank sued the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City. The bank claimed that the 19 months it had been waiting to acquire a master account exceeded the legally set limits on response time.

The Lummis-Gillibrand Responsible Financial Innovation Act would make requirements for Fed responses to master account applications.

Federal Reserve Bank governor Michelle Bowman alerted in a statement that the new guidelines are only the first step in providing a transparent process. There is a risk that this publication could set the expectation that reviews will now be conducted on an accelerated timeline.


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