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The central bank will create a multi-tier system for the review process, Wyoming crypto banks are likely to be the most closely monitored.
According to the announcement, the US Federal Reserve (Fed) will published this afternoon detailed instructions on how grants access to the Federal Reserve’s accounts and payment services to banks dealing with cryptocurrencies and other institutions.
@federalreserve announce final guidelines that establish a transparent, risk-based, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts and payment services: https://t.co/wCgJEOXsgn
— Federal Reserve (@federalreserve) August 15, 2022
Notify The above appears to bring the US central bank closer to allowing Wyoming special purpose depository institutions (SPDIs) such as Custodia (formerly Avanti) and Kraken Bank, to access the accounts this without going through an intermediary bank. This is considered an important link in the US and international financial system.
In the statement, Fed Vice President Lael Brainard said:
“The new guidelines provide a consistent and transparent process for evaluating applications for Federal Reserve accounts and access to payment services to promote a secure payment system, comprehensive and creative”.
The guidance is largely similar to what was first proposed in 2021 to create a multi-tier system that would allow the Fed to tailor the review process depending on the type of financial institution it is applying to.
All seven members of the Federal Reserve Board voted in favor of the proposal. The new guidance says institutions without federal deposit insurance (FDIC) will face more scrutiny. As follows:
- Tier 1 banks will be federally insured.
- Tier 2 banks will not be federally insured but will still be subject to close scrutiny from the federal banking agency.
- The third tier, which includes companies that are not federally insured and are not subject to strict federal banking oversight, will most likely apply to Wyoming crypto banks.
The main account issue for fintech companies has been a matter of considerable controversy. Custodia and Kraken both signed up for primary account access in 2021, shortly before the Fed announced its initial proposal.
David Kinitsky, CEO of Kraken Bank, said at the time that the proposal was a positive step for his company. However, Custodia is suing the Fed for allegedly violating a one-year deadline for granting key account access.
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