Fed’s crypto supervisory group has industry butting heads

Fed’s new rules and supervisory group have some industry members giddy while others fear the worst

article-image

Tanarch/Shutterstock modified by Blockworks

share

The Federal Reserve revealed plans for its “novel activities” supervisory program Tuesday afternoon, evoking mixed sentiments within the crypto industry.

The program is designed to ramp up the central bank’s governance over how banks are using and engaging with cryptocurrency and other technologies the Fed deems “novel.” New rules requiring state banks to go through the Federal Reserve before interacting with stablecoins also made their debut Tuesday. 

Some crypto industry members saw the efforts as a welcome intervention from federal regulators after months of begging for clearer guidelines. 

“This is an extremely important step in that it provides greater regulatory clarity for those banks looking to custody crypto, support the use of stable coins, and engage in other activities related to digital ledger technology,” Martin Grant, former chief compliance officer at the New York Fed and current global head of regulatory affairs at JST Digital, said. 

Others were dubious the new rules would promote innovation as opposed to creating more barriers. 

“I worry that this portends to be the Fed opening up to the existence and staying power of stablecoins when in reality they’re creating an untenable pathway to compliance through a subjective non-objection process they have complete control over,” Cody Carbone, vice president of policy at the Chamber of Digital Commerce, said. 

The new policy states that subsidiaries of member banks and other non-members must receive written “non-objection” from the Fed before issuing, holding or transacting with stablecoins. Carbone applauded the Fed’s attempt to monitor risk and compliance efforts, but maintained that the new rules give the central bank too much power. 

On the other hand, the Fed’s decision to create the program and increase its rules signal that the central bank may be coming around to blockchain as a disruptive technology, John Rizzo, senior vice president for public affairs at Clyde Group, said. 

“Crypto opponents will argue that this decision is an indictment of crypto’s inherent risks; however, the decision is a recognition that Congress and federal regulators have moved too slowly to get a regulatory framework for crypto assets in place,” Rizzo said. 

Plus, Rizzo added, given the recent banking crisis and ongoing regulatory uncertainty surrounding the space, the central bank was forced to step in. 

“The Federal Reserve is between a rock and hard place,” Rizzo said. “The failure to put a regulatory framework for crypto assets in place has created uncertainties at a time when rising interest rates are challenging the viability of certain financial institutions.”


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

5.png

Research

This months PPGC covered four main areas. Firstly, is a discussion around PIP-48 which is an introduction of Path Based Storage Schemes (PBSS). Secondly is the a implementation of DNS Discovery which enhances node synchronization by providing secure and efficient peer connections. Thirdly an update on PIP-47 Delayed for Security. Lastly, an overview of the Season 1 Transparency Report for the Polygon Community Grants Program.

article-image

Largely seen as pro-crypto, Donald Trump is set to once again take the White House

article-image

Moreno was leading Brown 50.6% to 46% as of 11:30 pm ET, when 91% of votes had been reported

article-image

BlackRock’s Samara Cohen said “a fair amount of plumbing” is needed to unlock the ability for pensions and endowments to gain BTC exposure

article-image

CoinFund president Chris Perkins said crypto voters will influence a number of election outcomes

article-image

Crypto stances vary among candidates vying for Senate seats in Utah, Michigan and Arizona