Federal Reserve’s Crypto Makeover: Banks Can Now Dance With Digital Assets! 💃🕺

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Ah, the United States Federal Reserve has decided to sweep the cobwebs off its old, dusty guidance and allow certain banks-yes, even those cheeky uninsured state institutions-to frolic in the delightful realm of crypto activities. Who knew financial governance could be so entertaining? 🎉

  • The Federal Reserve has graciously rescinded its 2023 guidance that previously barred our plucky uninsured state-chartered banks from playing in the crypto sandbox under its watchful eye.
  • New guidance opens the floodgates for crypto-native banks! They can now formally waltz their way into the Fed and settle payments directly, bypassing the usual meddlesome intermediaries. How liberating! 🌊

The Fed has proclaimed that this splendid decision was based on the notion that the old policy had become as relevant as a floppy disk in a cloud computing world. Apparently, both the financial system and the Board have had a delightful evolution over the years-who’d have thought? 🤔

According to the Fed’s new guidance, both insured and uninsured Board-supervised state member banks can now engage in various “innovative activities.” Yes, you heard that right! They may now dip their toes into the dazzling waters of cryptocurrencies, provided they play by the supervisory expectations, of course. 🏊‍♂️

Previously, under the 2023 framework, uninsured banks were stuck in a rather dull position, forced to follow the same restrictions as their insured counterparts, even when their charters allowed otherwise. It was like being told you could only ride a bicycle when you had a perfectly good motorbike in the garage! 🏍️

Fed Governor Under Fire! 🔥

This old guidance also played a starring role in Custodia Bank’s unsuccessful bid for a master account, as revealed by CEO Caitlin Long. She welcomed this latest move as a much-needed correction and took a delightful jab at Fed Governor Michael Barr, who didn’t quite agree with the new guidance. Oh, the drama! 🎭

Custodia Bank, an audacious crypto custody specialist sans FDIC insurance, had their Fed master account dreams dashed back in 2020. A U.S. District Court for the District of Wyoming dismissed their case after the Fed waved around that very guidance that has now been tossed aside like yesterday’s news. 📅

In a separate statement, Barr defended the previous policy, insisting that treating all banks equally helps maintain a lovely competitive balance-such a noble sentiment! He warned against regulatory arbitrage, which sounds terribly serious and quite boring. 😴

Long, however, wasn’t about to let Barr off the hook. She claimed the Fed “broke the law” by citing guidance that hadn’t even officially taken effect. Talk about a plot twist! 📜

“Insiders have whispered that Barr instructed Fed staff to dig up anything to deny Custodia shortly after FTX’s spectacular crash-what a coincidence!” Long quipped, adding a sprinkle of intrigue to the whole affair. 🕵️‍♀️

The Fed Catches Crypto Fever! 🤒

Under the new policy, our beloved uninsured banks can now apply for Federal Reserve membership without the risk of being disqualified based on what they primarily do-quite the relief! This means they can directly access central bank payment systems and settle transactions without having to lean on those pesky intermediaries. How positively revolutionary! 🔄

“New technologies bring efficiencies to banks and improved offerings to customers,” chimed in Vice Chair for Supervision Michelle W. Bowman. Such optimism is delightful, isn’t it? 🌟

“By creating a pathway for responsible innovation, the Board ensures the banking sector remains safe while also being modern and efficient,” she added. Well, who wouldn’t want that? 🙌

In related news, earlier this month, Bowman announced her intention to push for new regulations governing both banks and stablecoin issuers-because nothing says ‘fun’ like more regulations! Her mission? To foster a competitive and accountable environment. 🏛️

“As a regulator, I must encourage innovation responsibly,” she declared, adding that she’d collaborate with other agencies to develop capital and diversification standards under the GENIUS Act. Sounds like a party! 🎈

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2025-12-18 11:10