US Federal Reserve Requires Banks to Obtain Approval Before Conducting Stablecoin-Related Activities

The US Federal Reserve has started a new program to supervise novel activities in the banks it oversees. The program will focus on novel activities related to crypto-assets, distributed ledger technology (DLT), and complex, technology-driven partnerships with nonbanks to deliver financial services to customers.

In addition, the US central bank also provided additional information on the process for a state bank supervised by the Federal Reserve to follow before engaging in certain dollar token or stablecoin activity. According to a statement, national banks are allowed to use distributed ledger technology or similar technologies to conduct payments activities as principal, including by issuing, holding, or transacting in dollar tokens, but must demonstrate that they have had controls to conduct the activity in a safe and sound manner, and obtain approval from the supervisors.