The United States Federal Reserve has launched the ‘Novel Activities Supervision Program.’ The new operation aims to manage the risks linked to Fed-supervised banks engaging with cryptocurrency and other related technologies.
“The Program will help ensure that regulation and supervision allow for innovations that improve access to and the delivery of financial services, while also safeguarding bank customers,” the Fed stated.
What Is the Fed’s Goal With the Program?
According to an Aug. 8 statement, the Fed’s intention for the program is to ensure banking stability in the face of ongoing crypto and digital technology advancements.
The Fed wrote,
“Given the novelty of these activities, they may create unique questions around their permissibility, may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system.”
The Fed notes activities such as holding and trading crypto-assets, loans backed by crypto, stablecoin, and dollar token creation.
Additionally, a state bank must have appropriate safeguards before becoming involved in specific dollar token or stablecoin activities.
The Fed will conduct reviews of banking organizations that engage with crypto and blockchain technologies on a regular basis. If required, the Fed will request specific organizations to undergo a review.
To learn more about crypto versus banking check out BeInCrypto’s guide: Crypto vs. Banking: Which is a Smarter Choice?
FedNow Rollout Adds Increased Scrutiny
The Fed’s current supervisory teams will lead the program, observing and reviewing these new activities undertaken by supervised banks.
“The Federal Reserve will periodically evaluate and update which banking organizations should be subject to the examination of novel activities through the Program, and banking organizations will be notified accordingly.”
This comes after the introduction of FedNow on July 20 by the Federal Reserve. FedNow is an instant payment service enabling financial institutions to instantly transfer money every day of the year.
However, the announcement did not come without criticism. US presidential candidate, Robert F Kennedy Jr, warned that FedNow is the first step toward “financial slavery and political tyranny.”
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