thu August 25, 2022 ▪ 7:00 am ▪
min reading – per
The Board of Directors of the US Federal Reserve (FED) has just issued a number of guidelines. They concern crypto banks wishing to secure access to the main account. This publication comes more than a year after the banks in question initiated requests to standardize applications for opening a main account. These guidelines are actually a set of specifications that cryptocurrency depository organizations will have to comply with. With these guidelines, the FED is demonstrating its flexibility vis-à-vis crypto companies and new companies wishing to access global payment channels.
The US crypto community is relishing the new FED guidelines
More than a year after the introduction of requests from some US crypto banks for standardize main account opening requests, the FED comes out of silence. She has indeed just communicated a set of directive explaining how she planned to go about review reserve account applications from banks. It should be noted that all institutions that have a main account with the FED have direct access to its payment systems.
It is for this reason that companies must necessarily rely on banks with a main account. Crypto banks can relish, because their willingness to end intermediary partnerships with traditional financial institutions takes shape. Admittedly, these FED guidelines do not have a legal constraint, but they serve as a canvas to follow for crypto banks in search of standardization.
The guidelines reassure, but the content remains unclear
Although reassuring, the FED’s new guidelines remain evasive on some points. For example, as far as the review is concerned, the FED is not clearly saying what it is going to look like. In addition, it is unknown the time it will take to evaluate an application. This void raises reservations, especially since the FED took almost a year to respond to the requests of crypto banks. Julie Hill, a law professor in Alabama, makes a harsh observation about this. She believes that these guidelines are not very different from the previous ones.
A feeling that the former CFTC lawyer Waal don’t necessarily share. For him, the main thing is elsewhere, because as the guidelines stipulate : “The Board of Directors believes that the final guidelines on access to accounts will provide a solid framework for analyzing and mitigating risks”. Clearly, De Waal thinks that these guidelines on bitcoin and crypto banks are good news.
The absence of certain details in the guidelines shows that much remains to be perfected and the FED is aware of this. At least that is what emerges from the analysis of Michelle Bowman, a member of the FED’s Board of Directors. She warns : “There is still work to be done before a process is established to fully implement the guidelines. There is a risk that this publication will create the expectation that the examination of these applications will now be carried out within an accelerated time frame. »
Ultimately, the FED has complied with the requests of American crypto banks wishing to access the main account. It has set up six principles to which potential candidates will have to comply. The only downside is the imprecision of the content of the directives in question. For example, Level 3 candidates will have to be carefully evaluated, but it is not known what this will actually consist of. We understand that this is a long process that has just started, so we will have to be patient for the next phase.
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PhD student in financial law and experienced SEO web writer, Cedrick Aimé is passionate about cryptocurrencies, trading, etc. He naturally participates thanks to his articles in the blockchain revolution on a daily basis for a better democratization of DeFi.