Last Updated on August 9, 2023 by Bitfinsider

On Tuesday, the Federal Reserve announced new safeguards to improve its oversight of institutions participating in crypto and stablecoin operations.

The “Novel Activities Supervision Programme” will strengthen the central bank’s oversight of all banking organisations it regulates, with a focus on crypto, distributed ledger technology, and “technology-driven partnerships with nonbanks to deliver financial services to customers.”

“Innovation can also lead to rapid change in individual banks or the financial system, as well as generate novel manifestations of risks that can materially impact the safety and soundness of banking organisations,” the central bank said in a statement. “Because of the novelty of these activities, they may raise unique questions about their permissibility, which may not be adequately addressed by existing supervisory approaches, and which may raise concerns for the broader financial system.”

The bank stated that businesses engaged in “novel” operations would not be transferred to a separate supervisory portfolio.

“Instead, the Programme will work within existing supervisory portfolios and alongside existing supervisory teams,” it stated, adding that the banks whose operations will be evaluated would be notified in writing. “The Programme will help ensure that regulation and supervision allow for innovations that improve access to and delivery of financial services, while also safeguarding bank customers, banking organisations, and financial stability.”

The Federal Reserve also stated that financial institutions will not be prevented or discouraged from offering banking services to any certain class or kind of consumer.