Aug 8 (Reuters) - State banks that are a member of the U.S. Federal Reserve system should obtain a written supervisory nonobjection from the Fed before issuing, holding or transacting in dollar tokens used to facilitate payments, such as stablecoins, the central bank said in a new supervisory letter Tuesday.
The Fed also said it is creating a new supervisory program to oversee the activities of the banks it supervises related to cryptocurrency, blockchain technology and tech-driven nonbank partnerships, with the aim of complementing its existing supervisory process and strengthening the oversight of tech-driven activities.
Prior attempts by major mainstream companies to launch stablecoins have met fierce opposition from financial regulators and policymakers.
For banks to receive a written nonobjection to be able to engage with stabelcoins, banks should demonstrate appropriate risk management, including having systems in place to identify and monitor any potential risks, including cybersecurity and illicit finance threats, according to the Fed.
After receiving a written nonobjection, state member banks engaging in dollar token-related activities will continue to be subject to supervisory review as well as heightened monitoring of those activities, the Fed said.
Persons:
Hannah Lang, Chris Reese, Jonathan Oatis
Organizations:
U.S . Federal, Federal Reserve, PayPal, ., Fed, Thomson
Locations:
Washington