Regulatory Developments
The Federal Reserve has taken several policy actions since the publication of the November 2022 Supervision and Regulation Report. Significant actions are detailed in table 1 below. All Supervision and Regulation (SR) and Community Affairs (CA) letters are available on the Federal Reserve Board's website.10
The Federal Reserve recently issued statements for supervised institutions engaged in or interested in engaging in crypto-asset-related activities (box 2). The crypto-asset-related statements support the financial industry's innovative use of technology to efficiently provide financial services in a safe-and-sound manner.
Table 1. Key Federal Reserve or interagency rulemakings/statements (proposed and final)
From 11/01/2022 to 04/28/2023
| Date issued | Rule/guidance |
|---|---|
| 11/23/2022 | Agencies announce results of resolution plan review for largest and most complex domestic banks. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20221123a.htm |
| 12/2/2022 | Federal Reserve Board invites public comment on proposed principles providing a high-level framework for the safe-and-sound management of exposures to climate-related financial risks for large banking organizations. Press release: https://www.federalreserve.gov/newsevents/pressreleases/other20221202b.htm |
| 12/16/2022 | Federal Reserve Board adopts final rule that implements Adjustable Interest Rate (LIBOR) Act by identifying benchmark rates based on SOFR (Secured Overnight Financing Rate) that will replace LIBOR in certain financial contracts after June 30, 2023. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20221216a.htm |
| 1/3/2023 | Agencies issue joint statement on crypto-assets risk to banking organizations. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230103a.htm |
| 1/17/2023 | Federal Reserve Board provides additional details on how its pilot climate scenario analysis exercise will be conducted and the information on risk-management practices that will be gathered over the course of the exercise. Press release: https://www.federalreserve.gov/newsevents/pressreleases/other20230117a.htm |
| 1/27/2023 | Federal Reserve Board issues policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230127a.htm |
| 2/23/2023 | Agencies issue joint statement on liquidity risks resulting from crypto-asset market vulnerabilities. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230223a.htm |
Box 2. Crypto-Assets
The Federal Reserve recently issued statements for supervised institutions engaged in or interested in engaging in crypto-asset-related activities or with crypto-sector participants. Taken together, the statements have instructed banking organizations to take a careful and cautious approach with crypto-asset-related activities or crypto-sector exposures and to ensure their risk management is appropriate. Banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation.
On January 3, 2023, and February 23, 2023, the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) issued joint statements on risks related to crypto-assets.1 Risks include the possibility of fraud or misrepresentations, significant volatility, immature risk-management practices, and heightened risks associated with open, public, and/or decentralized networks. The January 3 statement also described the agencies' approaches to supervising these activities, noting their careful and cautious approach for current and proposed activities at banking organizations. The February 23 statement notes that certain sources of funding from crypto-asset-related entities may pose heightened liquidity risk and can lead to unpredictable deposit inflows and outflows at banking organizations. The statement reminds supervised institutions to monitor the drivers of liquidity risk and to maintain effective risk-management practices for those risks.
On January 27, 2023, the Federal Reserve issued a policy statement on section 9(13) of the Federal Reserve Act (Act).2 The preamble to that statement provides clarification for state member banks on the Board's interpretation of section 9(13) of the Act with respect to certain crypto-asset-related activities. The statement also stated that the Federal Reserve would presumptively prohibit state member banks from holding crypto-assets as principal.
The Federal Reserve continues to actively monitor and supervise interest or engagement in crypto-asset-related activities by supervised institutions. The Federal Reserve will continue to build knowledge, expertise, and understanding of the risks crypto-assets and crypto-asset-related activities may pose to banking organizations, their customers, and the broader U.S. financial system. The Federal Reserve is creating a specialized team of experts to monitor and analyze novel-activities-related developments and to coordinate oversight of banking organizations engaging in such activities.
1. See Board of Governors of the Federal Reserve System, "Joint Statement on Crypto-Asset Risks to Banking Organizations," news release, January 3, 2023, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230103a1.pdf. See also Board of Governors of the Federal Reserve System, "Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities," news release, February 23, 2023, https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230223a1.pdf. Return to text
2. See "Policy Statement on Section 9(13) of the Federal Reserve Act," at https://www.federalregister.gov/documents/2023/02/07/2023-02192/policy-statement-on-section-913-of-the-federal-reserve-act. Return to text
References
10. The Federal Reserve publishes SR and CA letters to address significant policy and procedural matters related to the Federal Reserve System's supervisory responsibilities and its consumer compliance supervisory responsibilities, respectively. SR letters are available on the Board's website at https://www.federalreserve.gov/supervisionreg/srletters/srletters.htm, and CA letters are available on the Board's website at https://www.federalreserve.gov/supervisionreg/caletters/caletters.htm. Return to text