The Federal Reserve Bank reveals final rules that will guide how crypto banks can apply for and obtain primary accounts.
A master account is the record of the account holder’s financial rights and obligations to the administering reserve bank.
The Federal Reserve Bank says the level of scrutiny or due diligence to which primary account applicants will be subjected will depend on the degree of risk they pose.
“The new guidelines include a tiered review framework to provide further clarity on the level of due diligence and scrutiny Reserve Banks will apply to different types of institutions with varying degrees of risk.
For example, institutions with federal deposit insurance would be subject to a more streamlined level of scrutiny, while institutions that engage in new activities and for which authorities are still developing oversight and regulatory frameworks appropriate would be further investigated.
According to the Federal Reserve Bank, master accounts are highly sought after by institutions offering “new types of financial products” or those with “new charters”.
“Institutions offering new types of financial products or with new charters have grown in recent years, and many have requested access to the accounts – often referred to as “primary accounts” – and payment services offered by Federal Reserve Banks. .
The guidelines will be used by reserve banks to assess these requests with a transparent and consistent set of factors.
A member of the Federal Reserve System’s board of governors, Michelle Bowman, says there’s a lot of work to be done before the guidelines are fully updated.
“However, these guidelines are only the first step towards a transparent process.
There is still work to be done before a process is established to fully implement the guidelines.
There is a risk that this publication suggests that reviews will now be completed in an accelerated timeframe. »
The Federal Reserve guidelines come two months after Custodia, a crypto bank founded by former Wall Street executive and crypto lawyer Caitlin Long, sued the US central bank over delays in approving its account application. major.
Custodia claimed in its June lawsuit filing that the Federal Reserve had delayed a decision on the request for more than 19 months.
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