CryptoLink - August 2023 Updates
August was a relatively quiet month on Capitol Hill, with Congress out on August recess. Regulators from across the Biden administration, however, remained active, setting expectations for industry players, shutting down a bank implicated in the FTX scandal, and proposing new regulations for digital assets, a move which sparked reactions from lawmakers on Capitol Hill.
The Federal Reserve (the Fed), via two separate letters from senior officials, outlined supervisory expectations for banks interested in engaging in activities involving digital assets. Responding to novel crypto activities from many financial institutions the Fed oversees, Michael Gibson, director of the Division of Supervision and Regulation, and Eric Belsky, director of the Division of Consumer and Community Affairs, announced in a cowritten letter that state-chartered banks must receive a written notification of supervisory non-objection from the Fed before issuing, holding or transacting in stablecoins, to demonstrate they can safely and soundly engage in such novel activities. Gibson also announced in a separate letter that the Fed had set up a program to strengthen oversight of activities involving digital assets and blockchain technology. Both letters and the actions they detailed serve as a clear signal that the United States central bank is increasing its scrutiny of financial institutions entering the digital assets space. They also drew the ire of Republican lawmakers.
