The Federal Reserve Board of the United States has announced that the guidelines for reserve banks when reviewing requests for payment services have been finalised.
These guidelines will create a three-tiered framework with the level of due diligence, depending on the entity that is applying for account and payment services. Initially, the guidelines were proposed last year in May with a follow-up proposal in March. The Federal Reserve Bank has followed up with a statement, saying that:
“Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.”
This has been refined to include further details, saying that there are several types of institutions to consider with the framework.
“…Several types of institutions, including (1) institutions with traditional charters, such as banks and credit unions, and their trade associations; (2) institutions with novel charters, such as cryptocurrency custody banks, and their trade associations; and (3) think tanks and non-profit advocacy groups.”
The Federal Reserve and crypto
The Federal Reserve Bank of the United States has not been quick to provide access to crypto banks for Federal Reserve accounts. Cryptocurrency bankers have been critical of this in the past because of the obstacles it presents to trading and investment in the industry.
While certain states are more crypto-friendly than others, such as Wyoming which has allowed blockchain-based banks to operate, there is still a limited amount that crypto banks can operate in the country. The latest guidelines don’t necessarily offer more ease for crypto banks to offer products and services to investors, but it does put the first stepping stone down to regulate the space. If the Federal Reserve can work towards implementing protocols in place for crypto banks to gain access to accounts, the industry stands to gain from regulatory acceptance.
