Fed scraps oversight program for banks with crypto and fintech exposure
Key Takeaways
- The Federal Reserve discontinued its special supervision program for banks involved with crypto and fintech.
- Oversight of crypto and fintech activities will now be incorporated into the Fed’s regular supervision framework.
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The Federal Reserve has discontinued its “novel activities” supervision program that was created to monitor banks’ involvement in crypto and fintech activities, opting instead to incorporate this oversight into its regular bank supervision framework, the Fed said Friday.
The program, launched in 2023, was initially designed to focus on how banks interact with emerging technologies. The Fed said the dedicated program was no longer necessary as it had enhanced its understanding of these risks and banks’ risk management practices.
The Novel Activities Supervision Program would have covered a range of activities, including stablecoin issuance, tokenized securities, API-driven partnerships with nonbanks, and banking exposure to crypto clients. Fed examiners were meant to work within existing supervisory teams to identify and monitor these activities, with oversight levels adjusted based on a bank’s involvement.
The original program was designed to leverage external expertise from academia and industry to inform future supervisory guidance, aiming to balance innovation with safety and soundness considerations.
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