Feds likely to grant master accounts to crypto companies

America’s central bank The Federal Reserve has released formal guidelines for “institutions offering new types of financial products or with novel characters”.

These institutions will be granted “master accounts”, which will grant them a direct access to the Fed.

This move has widely been construed to signify that the Fed is looking to regulate cryptocurrency, despite not putting it in so many words. In fact, “Final Guidance”, a 49-page document only mentions the word “cryptocurrency” once.

This is hopefully going to solve some of the most recent unpleasantries between the Fed and companies involved in the crypto sector.

Custodia and Kraken both applied for a masters account. Custodia missed the deadline and subsequently sued the Fed, which had delayed the procedure.

However, this new guideline should offer some additional clarity and help instruct the industry, putting aside such legal bickering and focusing on monitoring and regulating cryptocurrencies (not in so many words) instead.

In a statement, Fed vice chair Lael Brainard said: “The guidelines set up a tiered framework that organizes applicant institutions based on their apparent risk level. Tier 1 would consist of federally insured applicants, and Tier 2 includes institutions that are not federally insured but are still “subject to federal prudential supervision.”

Then, there is the case of Tier 3 licenses which will cover institutions that are not federally insured or subject to prudential supervision, the statement read.

Custodia and Kraken are most likely going to be offered this type of license, suggesting that the Fed is ready to work with cryptocurrency companies on some level but not yet vest too much power in them.

In the meantime, you can explore cryptocurrencies at 1xBit, FortuneJack or Bitcasino.io.

Source

Updated: 08/17/2022 — 14:00