Federal Reserve will require state banks to get written ‘non-objection’ from central bank before engaging with stablecoins

Aug. 9, 2023

By Assad Jafri

The Fed stated that its approval hinges on the ability of banks to show that they possess the necessary control systems to manage the risks tied to stablecoins.

The U.S. Federal Reserve has issued new guidelines for state member banks regarding activities involving stablecoins or “dollar tokens.” According to these guidelines, banks must secure a written non-objection from the regulator before engaging in any such activities.

Under the new rules, national banks will have to submit an application detailing the services they intend to offer using stablecoins and how they will manage the risks associated with these activities, including those for testing purposes.

The Fed said that its approval would depend upon whether the national bank can demonstrate that they have adequate control frameworks in place to manage risks related to operations, liquidity, cybersecurity, illicit finance, and consumer compliance.

All activities related to stablecoins must comply with the relevant financial laws and regulations imposed on payment services, including the Bank Secrecy Act and requirements put in place by the Office of Foreign Asset Control.

To read the entire article...Click Here!