The U.S. Federal Reserve Board has said it has released the final guidelines which are set to be used by Reserve Banks when “reviewing requests to access Federal Reserve accounts and payment services.” According to the board, the final guidelines will become effective as soon as they are published in the Federal Register.
New Guidelines Aimed at Establishing a Transparent and Consistent Set of Factors for Reserve Banks
The board of the U.S. Federal Reserve recently announced what it called the “final guidelines which establish a transparent, risk-based, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts.”
As per the bank’s statement, the latest guidelines are almost identical to the ones proposed in May 2021 and the supplemental ones which were proposed in March this year. These new guidelines will become effective once they are published in the Federal Register.
The move could pave the way for fintech and crypto banks and special purpose depository institutions (SPDIs). Kraken Bank applied for a master account with the Federal Reserve Bank in October 2020. In the Fed’s recent statement, Lael Brainard, the vice chair of the U.S Federal Reserve, is quoted explaining why the guidelines are needed.
“The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system,” Brainard said.
Growing Requests for Access to Accounts
The growing requests for access to accounts — aka master accounts — stem from the rising number of institutions offering “new types of financial products” or those with novel charters. According to the U.S. Federal Reserve, the new guidelines stipulate that institutions with federal deposit insurance will be subjected “to a more streamlined level of review.”
On the other hand, for institutions adjudged to be engaged in novel activities or those for which an “appropriate supervisory and regulatory framework” is yet to be formulated, a more extensive review would be required, the statement said.
In June, Custodia Bank (formerly Avanti) sued the Federal Reserve Board of Governors over an alleged “unlawful delay” of the company’s master account application. Similar to Kraken, Custodia also applied for a Fed master account in October 2020, and it has been waiting 21 months for an answer since the filing.
What are your thoughts on this story? Let us know what you think in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
