What does the Fed’s proposed standards for new types of institutions mean for crypto banks?


  • Has a new concession licenses of financial institutions seeking access to central banking accounts and services , the Fed is on how to assess such requests for comment.

  • For the encryption field, this seems to be good news. But how good is it?

  • These developments came at a time when the Office of the Comptroller of the Currency (OCC), the country’s top banking regulator , adjusted its leadership.

Earlier this month, the Federal Reserve (Federal Reserve) proposed a set of proposed new standards for evaluating “novel institutions” that want to receive Fed payments and account services.

At present, the guidance is only a suggestion and has not yet taken effect. It will openly solicit public comments within 60 days, at which time it will undergo a revision process that may last several months or longer. However, the act of making the new draft standard public does show that it is genuinely interested in extending the scope of services to non-traditional participants (especially those using emerging technologies) and providing financial services for them.

As the central bank of the United States, the Federal Reserve is the hub for mutual transactions between the country’s financial institutions. For example, they need to open an account with the Federal Reserve to use the Automated Clearing House (ACH).

Some non-bank institutions cooperate with the Federal Chartered Bank to obtain Fed services, but this adds another layer of delay and fees. This is the dilemma that encryption companies have always faced. From the perspective of the advocate, it weakens the potential efficiency of the technology through the participation of third parties.

This situation is the core reason why the U.S. OCC promotes the expansion of its fintech franchise licenses and provides banking licenses to companies such as Anchorage, Protego, Paxos, etc. This makes the industry’s supporters and stakeholders extremely excited.

The guidance itself is affirmation of technological progress in general. “As technological progress and other factors lead to the introduction of new financial products and services, and the different ways of providing traditional banking services , the payment field is developing rapidly. Related to this, there are new types of franchise approved or considered nationwide recently. As a result, the Federal Reserve is receiving more and more inquiries and requests from new institutions for access to accounts and services.”

There is no direct mention of cryptocurrency (crypto), the Fed does not specify companies or specific technologies throughout the document , nor does it use broader phrases such as “financial technologies” or “fintech”. Regulators like the buzzword “tech-neutral,” which may explain why the Fed’s guidance is somewhat ambiguous . When The Block contacted the Federal Reserve for comment, a representative also refused to confirm or deny that any franchised agency or company was involved in promoting the initiative.

So what are these new types of institutions?

But someone in the encryption industry itself confirmed to be involved.

KrakenDavid Kinitsky CEO of the bank said in a statement that the company is located in chartered banks in Wyoming “It is proposed to guide the Fed’s recent comments are intended to permit the kind of forward-looking process.” He further confirmed that the company intends “to promote Our own master account application”.

U.S. Senator Cynthia Lummis also quickly mentioned the Wyoming crypto-friendly special purpose deposit institution (SPDI) franchise license as a reminder of the Federal Reserve’s guidelines. “Wyoming has developed the best Crypto asset regulatory framework in the United States. I am proud of the Fed’s careful consideration of Wyoming’s leadership.”

But for OCC’s federal franchise license, this relationship is not so clear. Anchorage is the first Crypto asset company to obtain a license from the National Bank, and the company declined to comment on the new guidelines. A representative of Paxos stated that the company did not notify in advanceThe Federal Reserve’s proposal. Paxos operates based on the New York Bank Trust and obtained a conditional license license from the OCC  at the end of April  .

Different prospects for national and state licenses

As far as OCC is concerned, it is facing changes at the management level. US Secretary of the Treasury Janet Yellen appointed Michael Hsu as the new acting administrator last week , and May 10 is his first day in office.

Although in fact it was the first time that the OCC in the Obama era promoted the formulation of a national financial technology license, this process was greatly accelerated under the leadership of Brian Brooks last year. Brooks’s work during his tenure has a solid position in the crypto industry. He left Coinbase The legal team later joined OCC and became the CEO of Binance US after leaving office.

Unfortunately, in terms of fintech licenses, Brooks became an angry target of congressional Democrats on the US House of Representatives Financial Services Committee. With the end of the term of former US President Donald Trump (Donald Trump), there is strong political pressure to abolish the previous actions of Brooks and former OCC Administrator Joseph Otting.

On May 11, local time, the U.S. Senate passed a resolution calling for the revocation of Brooks’ “True Lender” rule, which is expected to face minimal resistance in the House of Representatives. The House of Representatives Financial Services Committee has issued a similar signal of opposition to the OCC’s recent franchise license .

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