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Existing laws and regulations relating to custody services, buying and selling crypto, crypto-collateralized loans, HODLing, and the creation of stablecoins are being revised by government bodies.
Following fast evaluations by government agencies, the US Federal Reserve intends to address issues that they believe are affecting digital asset regulation in the country.
In a Tuesd announcement, the Board of Governors of the Federal Reserve System said it recently worked with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency on a series of “policy sprints” aimed at addressing regulatory clarity in the crypto space. The interagency effort included building a greater understanding of the terminology surrounding crypto assets, identifying potential risks, and analyzing existing regulatory frameworks to determine if any changes were necessary.
According to the Fed, in 2022, the three agencies will consider whether “certain crypto-related activities conducted by banking organisations are legally permissible,” as well as potentially adjusting compliance and enforcement standards on existing laws and regulations related to custody services, cryptocurrency buying and selling, crypto-collateralized loans, HODLing, and stablecoin issuance. The trio also plans to speak with the Basel Committee on Financial Supervision, a global group of banking supervisors and central banks that makes advice to institutions interested in storing cryptocurrency.
“The emerging crypto-asset sector presents potential opportunities and risks to banking organizations, their customers, and the overall financial system,” said the Fed. “The interagency sprints quickly advanced and built on agencies’ combined knowledge, which helped identify and assess key issues related to potential crypto-asset activities conducted by banking organizations.”
The announcement comes after a report released on November 1 by the President’s Working Group on Financial Markets, which stated that legislation to handle the possible financial hazards of stablecoins is “urgently needed.” At the moment, there appears to be a legislative tug-of-war between US government agencies attempting to regulate the crypto area, with the Securities and Exchange Commission and the Commodity Futures Trading Commission taking the lead.
Following Richard Clarida’s planned departure in 2022, over half of the seats on the Fed’s Board of Governors might be filled with new blood. On Monday, President Joe Biden announced he would be nominating Jerome Powell for a second term as Fed chair, with the potential to last until 2026.
However, as Powell is an existing board member, there will likely still be three empty seats for the U.S. President to fill during his first term. On Monday, the White House said Biden aimed to announce his picks for those positions as well as for the Fed’s vice chair for supervision in early December with a focus on “improving the diversity in the Board’s composition.”
The Senate Banking Committee announced on Tuesday that Powell would be testifying alongside Treasury Secretary Janet Yellen in a Nov. 30 hearing to address oversight of the Fed and Treasury in the Coronavirus Aid, Relief, and Economic Security Act. However, to be confirmed as the next Fed chair, Powell will still need to attend a hearing in front of the same committee before the Senate can vote on his nomination.