By Hannah Lang
(Reuters) -State banks which are a member of the U.S. Federal Reserve system ought to acquire a written supervisory nonobjection from the Fed earlier than issuing, holding or transacting in greenback tokens used to facilitate funds, akin to stablecoins, the central financial institution stated in a brand new supervisory letter Tuesday.
The Fed additionally stated it’s creating a brand new supervisory program to supervise the actions of the banks it supervises associated to cryptocurrency, blockchain know-how and tech-driven nonbank partnerships, with the goal of complementing its current supervisory course of and strengthening the oversight of tech-driven actions.
The brand new bulletins, which had been despatched Tuesday to supervisory and examination workers at Federal Reserve banks and state member banks, comes only a day after funds big PayPal (NASDAQ:) introduced it might launch its personal stablecoin, a kind of cryptocurrency sometimes pegged to a standard asset, usually the U.S. greenback.
Prior makes an attempt by main mainstream corporations to launch stablecoins have met fierce opposition from monetary regulators and policymakers. Meta’s, then Fb (NASDAQ:), 2019 plans to launch a stablecoin, Libra, had been foiled after regulators raised fears it may upset international monetary stability.
For banks to obtain a written nonobjection to have the ability to interact with stabelcoins, banks ought to exhibit applicable danger administration, together with having methods in place to establish and monitor any potential dangers, together with cybersecurity and illicit finance threats, based on the Fed.
After receiving a written nonobjection, state member banks partaking in greenback token-related actions will proceed to be topic to supervisory overview in addition to heightened monitoring of these actions, the Fed stated.
