Varun Resh
Fintech & Emerging Technologies
The U.S. Federal Reserve has recently published guidelines that establish a ‘transparent, risk-focused, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts and payment services’. This initiative is set to allow crypto banks to enter the U.S. banking system in a more regulated manner.
The guidelines oversee the process by which “institutions offering new types of financial products or with novel charters” could be granted “master accounts.” These are a key financial status possessed by all federally-chartered banks, that allows for direct payments with, and access to, the Federal Reserve. A three-tiered system has been proposed to evaluate the risk levels of the applicant institution.
- Tier 1: Federally insured applicants
- Tier 2: Applicants that are not federally-insured but still subject to “subject prudential supervision by a federal banking agency.”
- Tier 3: Applicants that are “not federally insured and not subject to prudential supervision by a federal banking agency.” This category is where crypto banks would most likely fit.
According to Lael Brainard, Vice Chair, Federal Reserve Board, “The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system.”
