SR 23-7

The Federal Reserve has announced a new „Novel Activities Supervision Program“ (Program), which focuses on supervision and oversight of banking activities on „crypto-assets, distributed ledger technology (DLT), and complex, technology-driven partnerships with nonbanks“. The reasoning behind it is that while technology and innovation can benefit customers and be tailored-to their needs, it also can lead to thus far unknown risks and material losses. The Program will focus on enhancing supervision on the following:
– Complex, technology-driven partnerships with non-banks to provide banking services
Where non-banks provide banking services to customers via an application that uses application programming interfaces (APIs)
– Crypto-asset related activities
„Activities such as crypto-asset custody, crypto-collateralized lending, facilitating crypto-asset trading, and engaging in stablecoin/dollar token issuance or distribution.“
– Projects that use DLT with the potential for significant impact on the financial system
Where the use of DTL is used for tokenization of assets (e.g. securities)
– Concentrated provision of banking services to crypto-asset-related entities and fintechs
Banking organizations concentrated in providing traditional banking activities such as deposits, payments, and lending to crypto-asset-related entities and fintechs.
The Federal Reserve claims that the program will be risk-based and depending on the novelties used. Banks will be notified in case their activities (or their exploration) are to be subject to additional supervision. The Federal Reserve is commited to obtain knowledge and implementation support from various sources that work closely with such technology, i.e. „academia and the banking, finance, and technology industries“