- The Federal Reserve
(Fed) has announced a new audit program to monitor the activities of banks related to cryptocurrency, blockchain technology, and tech-focused non-bank partnerships.
- The purpose of the new audit program is to identify and appropriately address risks in the banking system while encouraging financial innovation.
- Going forward, banks that are members of the Fed system will need to obtain written permission from the Fed before conducting transactions involving stable coins.
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The Federal Reserve is launching a new audit program to oversee the activities of banks in relation to cryptocurrencies, blockchain technology, and tech-based non-bank partnerships, with the aim of identifying and managing risks while promoting financial innovation.
Enhanced Supervision with New Audit Program
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The Federal Reserve has taken a significant step towards strengthening the supervision of technology-focused activities by unveiling a new audit program. This program is designed to monitor the activities of banks in relation to cryptocurrencies, blockchain technology, and partnerships with non-bank entities that are technology-focused. The aim is to complete the current audit process and bolster the supervision of these tech-centric activities.
Promoting Financial Innovation while Managing Risks
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The new audit program is not just about oversight; it’s also about promoting financial innovation. The Federal Reserve recognizes the potential benefits of financial innovation and seeks to encourage it through this program. However, it also acknowledges the need to identify and address risks in the banking system appropriately. This balance between fostering innovation and managing risks is a key focus of the new audit program.
Written Permission Required for Stable Coin Transactions
Another significant development is the requirement for banks that are part of the Federal Reserve system to obtain written permission before conducting transactions involving stable coins. This move, which comes just a day after PayPal announced the launch of its own stable coin, underscores the Federal Reserve’s commitment to maintaining a tight grip on the evolving digital currency landscape.
In conclusion, the Federal Reserve’s new audit program represents a significant step towards stronger oversight of tech-focused activities in the banking sector. By balancing the promotion of financial innovation with the need to manage risks, the program aims to ensure the stability and integrity of the banking system in the face of rapid technological change. The requirement for written permission for stable coin transactions further underscores the Federal Reserve’s commitment to robust supervision.