Crypto Operations Present Several Difficulties: Federal Reserve Governor
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At a discussion with the Institute of International Finance (IIF) on September 30, Governor Bowman stated that cryptocurrencies present several challenges and that the regulatory perspective should be prepared to accept the developing technology.
Governor Emphasized the Challenges
However, the governor emphasized that some regulations could be difficult to accomplish due to the rapidly developing technology behind cryptocurrency. Governor Bowman pointed out that difficulties arise, for instance, when participants in the financial industry lack knowledge of the requirements necessary to account for crypto-assets and the laws are unclear. Banks' involvement in crypto-asset operations is another area where regulation and monitoring are still being developed. These actions bring up several significant problems. She further stated,
"When I think about the evolution of supervision and regulation of these activities, I ask myself whether the rules are clear in the current rapidly evolving environment and whether the rules as they evolve serve a legitimate prudential purpose."
Awareness of Regulatory Requirements
Banks may engage in cryptocurrency-related operations, but Governor Bowman pointed out that they must first be aware of regulatory requirements. However, she encouraged additional discussion to determine the best regulatory stance. She further stated that the best method to resolve these issues and promote innovation is a discussion between bankers and regulators before, during, and after developing and deploying those technologies. Adoption and utilization of new technology can inevitably lead to unique regulatory concerns.
Federal Reserve Guidelines for Crypto Firms
Last month, the Federal Reserve considered master account applications from cryptocurrency businesses in its rules. The US Federal Reserve released final guidelines for crypto firms on account opening and the utilization of payment services. The bank asserts that businesses offering innovative charters and new products have made frequent requests for so-called master accounts.