Washington: The US Federal Reserve Board has provided additional guidance to banking organizations that engage or seek to engage in crypto-asset-related activities, stating that banks must inform the central bank before engaging in such assets.
The emerging crypto-asset sector presents potential opportunities for banking organizations, their customers, and the financial system as a whole, but it can also pose risks related to security and soundness, consumer protection, and privacy. financial stability.
The supervisory letter released by the US central bank on Tuesday outlines the steps banks overseen by the board should take before engaging in crypto-asset-related activities, such as assessing whether such activities are legally permitted and determining whether regulatory filings are required.
He added that banks should have adequate systems and controls in place to conduct crypto-asset-related activities in a safe and sound manner before commencing such activities.
Crypto trading is gaining prominence as various financial institutions and central banks have also signaled concerns about the financial risks associated with trading virtual currency, including cryptocurrency. This form of currency can potentially be used for various anti-social activities.
Indian central bank governor Reserve Bank of India, Shaktikanta Das, recently said that cryptocurrencies are a clear danger and that anything that derives its value from a pretense, without any underlying, does not is just speculation under a fancy name.
The nature and scale of crypto markets are changing rapidly and if current trends continue, they will pose risks to financial stability, the European Central Bank had said earlier.
Importantly, the price of the widely traded digital asset Bitcoin has fallen sharply from its all-time high over the past few months, depleting investors. Most of the other major cryptoassets have also seen larger declines recently.
The Financial Stability Board, an international body that monitors and makes recommendations on the global financial system, will report to G20 finance ministers and central bank governors in October on the regulatory and supervisory aspects of stablecoins and other cryptocurrencies. assets. It ensures that crypto-assets are subject to strong regulation and supervision.
“Crypto-assets, including so-called stablecoins, are changing rapidly. Recent turmoil in crypto-asset markets highlights their inherent volatility, structural vulnerabilities, and the problem of their growing interconnectedness with the traditional financial system” , said the Financial Stability Board. said. (ANI)