The House Committee on Financial Services claims the Federal Reserve has invented its crypto policy

Concerned about two recent letters regulating banks’ actions related to digital assets, the House Financial Services Committee wrote to Fed Chair Powell.

As a result of the Federal Reserve’s (Fed) recent oversight and regulatory letters concerning digital assets, the House Financial Services Committee has written to Fed Chair Jerome Powell to voice their concerns.

The second two letters, headed “Supervisory Nonobjection Procedure for State Member Banks Wanting to Engage in Certain Activities Utilizing Dollar Tokens” (SR 23-8) and “Creation of Novel Activities Supervision Program” (SR 23-7), were sent out on August 8, 2023.

The first of these letters creates a formal program to better regulate banking’s newfound use of fintech. An important part of the Novel Activities Supervision Program will be paying attention to.

The second letter detailed a supervisory clearance procedure for dollar-backed stablecoin issuance, holding, and transactions by requiring state member banks to show acceptable risk management skills.

Banks will be subject to stricter oversight if they participate in these novel operations without first receiving the Fed’s written approval.

The Committee expressed worry in a letter that these moves might derail Congress’ efforts to create a regulatory framework for payment stablecoins. Multiple separate crypto laws are now being debated in Congress, and if passed, they might provide the sector with much-needed guidance.

They warned that keeping the letters in place might discourage banks from taking part in the digital asset ecosystem.

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