The US government is actively moving towards establishing a nation that is fully digital asset-friendly, with numerous optimistic ventures and regulatory approvals underway in the country. Recently, the US Federal Reserve (Fed) pulled out/withdrew a specific part of the 2023 guidance that exempted banks from crypto activities.
The 2023 guidance constituted rules for Fed-supervised uninsured banks to follow similar rules to those of federally insured institutions. In this state, uninsured banks were prohibited from engaging in crypto-related activities, which resulted in their loss of Fed membership.
All the national banks that fall under the Fed are exempt from any crypto services, which applies to uninsured banks as well. To make it more precise, banks still have to go through Fed supervision, but they do not need a separate green light for crypto activities.
For those who are unaware, uninsured banks are institutions whose deposits are not protected by the Federal Deposit Insurance Corporation (FDIC).
Fed eyes financial innovation
The US Fed has been making attempts at fostering the crypto industry, amid the surge in pro-crypto approvals from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
The Fed moved to withdraw the guidance, particularly because the rules in the guidance are outdated and are contrary to the current innovation happening in the fintech industry.
The commission made its approach very clear in a statement: “New technologies offer efficiencies to banks and improved products and services to bank customers.”
Earlier in April, the Fed rescinded two crypto-restrictive letters. The first one required Fed-supervised state banks to provide advance notice when stepping into crypto activities.
The second letter dealt with banks obtaining a written supervisory non-objection letter before entering stablecoin-related services. However, both these requirements were scrapped, as financial innovation is a priority goal for the Fed and the US administration.
Crypto and bank integrations become common in the US
As we all know, banks and crypto are interlinked because both sectors deal with money and funds. In the US, banking and crypto integrations are gradually increasing, with several banks offering crypto custody services for Bitcoin, Ethereum, and other assets. Banks also help convert USD to dollar-pegged stablecoins, and send them to a crypto wallet.
Remember, Ripple Labs recently received a conditional approval from the US Comptroller of the Currency (OCC) to operate as Ripple National Trust Bank? Besides, stabelcoin issuer Circle, BitGo, Fidelity Digital Assets, and Anchorage Digital are other crypto firms that received the OCC approval. This indicates a major bridging between traditional finance and cryptocurrency.
