Federal Reserve creates ‘Novel Activities Supervision Program’ to oversee new financial technologies

The Federal Reserve Board announced connected Aug. 8 the instauration of the Novel Activities Supervision Program, a cardinal inaugural designed to oversee analyzable and rapidly advancing technologies wrong the banking sector, including those related to crypto-assets and blockchain technology.

In a important determination aimed astatine aligning fiscal innovation with regulatory oversight, the programme volition foster the benefits of technology-driven fiscal advancements portion appropriately addressing risks to support the information and soundness of the U.S. banking system. This determination reflects the Federal Reserve’s efforts to accommodate to an evolving fiscal landscape, wherever non-banks and emerging technologies play an progressively important role.

Balancing risk

The Novel Activities Supervision Program, elaborate successful SR 23-7, volition absorption connected analyzable partnerships with non-banks to supply banking services, crypto-asset-related activities, distributed ledger technology, and concentrated proviso of banking services to crypto-asset-related entities and fintechs. The programme volition enactment wrong existing supervisory processes, enhancing and strengthening oversight without imposing undue burden.

In conjunction with the Novel Activities Supervision Program, the Board has besides provided guidance connected the process for authorities banks supervised by the Federal Reserve to prosecute successful circumstantial dollar token oregon stablecoin activities. State subordinate banks looking to issue, hold, oregon transact successful dollar tokens indispensable show capable controls to behaviour the enactment safely.

Today’s guidelines absorption connected assorted hazard factors, including operational and cybersecurity risks, liquidity concerns, compliance with anti-money laundering rules, and adherence to user extortion statutes. This follows the Board’s January argumentation statement, promoting a level playing tract for banks with national supervision and gathering connected their ongoing efforts to make clarity for each parties arsenic fiscal services evolve.

The announcement emphasized the Fed’s committedness to facilitating innovation portion maintaining a robust regulatory framework. The supervision programme aims to show activities that whitethorn not beryllium adequately addressed by existing supervisory approaches and rise concerns for the broader fiscal system.

To guarantee the programme remains existent and practical, it volition prosecute with outer experts from academia, banking, finance, and technology, incorporating insights from real-time data, marketplace monitoring, and regular accusation exchange.