Wyoming’s crypto banks are expected to face the greatest scrutiny under the U.S. Federal Reserve Board’s established tiered rules for awarding Federal Reserve accounts.
The U.S. Federal Reserve Board said on Monday that it has reached a consensus on the criteria reserve crypto banks must take into consideration when evaluating requests for Federal Reserve accounts and payment services.
Depending on the risk level of the application, the rules provide a three-tiered review structure with the amount of due diligence to be given.
The final standards, which take effect after being published in The Federal Register, are “essentially identical” to the first recommendations, which were initially suggested in May 2021 and followed by a supplementary proposal published in March. In a statement, the Fed noted:
“Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.”
However, the framework was improved “to ensure more similar treatment amongst non-federally-insured institutions established under state and federal law,” the document added.
The most thorough examination will be given to non-federally insured banks that are chartered in accordance with federal law but lack a holding company under the control of the Federal Reserve. To use the international payment systems, crypto banks need a Federal Reserve account.
The Federal Reserve has long been criticized by cryptocurrency bankers for being sluggish to provide them access to Federal Reserve accounts, sometimes known as “master accounts.”
In 2019, Wyoming issued regulations allowing “blockchain banks.” Digital asset Custodia Bank, located in Wyoming, filed a lawsuit against the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City in June, alleging that the 19-month wait period for a master account surpassed the legal threshold for response time.
The Lummis-Gillibrand Responsible Financial Innovation Act would impose guidelines on how the Fed must respond to requests for master accounts.
Michelle Bowman, governor of the Federal Reserve Bank, issued a statement cautioning that the new rules “are merely the first step in creating a transparent process. […] There is a chance that this publishing may create a presumption that reviews will now be finished more quickly.
