The U.S. Federal Reserve (Fed) announced on Tuesday a new set of regulations to strengthen banking supervision engaged in activities related to cryptocurrencies and stablecoins. The move aims to mitigate the risks associated with crypto activities and protect users and the financial system.
The Fed says crypto is not off-limits, but banks need to get permission first.
Under the new regulations, the Novel Activities Supervision Program, all state banks that want to participate in crypto activities must obtain Fed pre-approval before issuing, holding, or trading stablecoins in U.S. dollars.
Additionally, upon registration, the Fed will look for flaws that could be exploited for money laundering, customer runs, or hacking. Banks that do not have adequate controls in place to prevent money laundering will not be allowed to engage in crypto activities.
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