The creation of guardrails for banks to stay within as they offer crypto-related products and services is the goal of the Federal Reserve, its top supervisor said Thursday.
Michael S. Barr, Federal Reserve Board vice chair for supervision, told the Peterson Institute for International Economics in Washington, D.C., that his agency is working with the other federal bank regulators to consider whether and how certain crypto-asset activity can be conducted in a manner that is consistent with safe and sound banking.
“We are also working toward providing additional clarity on our views of risks and effective risk management practices across a range of crypto-related activity,” Barr said. “We will continue to be transparent with the banking sector and the public about our expectations.”
Barr said the Fed will also work with the other agencies to align its approach to ensure that the same risks receive the same treatment. “As we continue our efforts, we will work to support innovation by establishing the guardrails essential for sustainable, safe, and transparent markets,” he said.
Barr told the group that the Fed’s overall stance on crypto is that banks should take a careful and cautious approach to engaging in crypto-asset related activities and the crypto sector.
“One overarching principle of the Federal Reserve’s financial oversight is that activities that are fundamentally the same should be regulated the same, regardless of where or how the activity occurs or the terms used to describe the activity,” he said. “We have a somewhat complicated financial services regulatory framework in the United States, and there are several regulatory authorities with oversight of financial services activities. But we know how important it is for entities interested in providing financial services with new technologies to engage on a level playing field. That is why we have worked closely with the other bank regulatory agencies to develop a consistent approach.”