Policy Statement on Section 9(13) of the Federal Reserve Act

Following the issuance of a corresponding press statement, the Board of Governors of the Federal Reserve System (FED) has now published in the Federal Register its new Policy as regards the engagement of FED-supervised banks in „novel“ financial services and products (e.g. custody services for crypto-assets). Specifically, in its new Policy Statement the FED is using its powers under Section 9(13) of the Federal Reserve Act to determine that banks – regardless of their level of Federal Deposit Insurance – may engage in new financial products and services so long as:
1. they have adequate policies and procedures in place to adequately manage the risks associated with such activities;
2. the risks taken on through the additional activities are commensurate with their business scope, size, and risk tolerance; and
3. the activities are also permitted for national banks that are supervised by the Office of the Comptroller of the Currency (OCC).
The new policy thereby eliminates the differential treatment of FED-supervised insured and non-insured institutions and aligns permissible activities of FED-supervised institutions with those of banks supervised by the OCC. According to the Board of Governors, this alignment shall ensure a level playing field of all banks and shall reduce regulatory arbitrage.