US Federal Reserve Board Unveils Final Guidelines Used When Reviewing Requests for Access to Master Accounts
The U.S. Federal Reserve Board has said it has released the final guidelines which are set to be used by Reserve Banks when “reviewing requests to access Federal Reserve accounts and payment services.” According to the board, the final guidelines will become effective as soon as they are published in the Federal Register. New Guidelines Aimed at Establishing a Transparent and Consistent Set of Factors for Reserve Banks
The board of the U.S. Federal Reserve recently announced what it called the “final guidelines which establish a transparent, risk-based, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts.”
As per the bank’s statement, the latest guidelines are almost identical to the ones proposed in May 2021 and the supplemental ones which were proposed in March this year. These new guidelines will become effective once they are published in the Federal Register. The Fed’s press release published on August 15, 2022 explains that the master account rules will apply when they are registered in the federal government’s official journal the Federal Register.
The move could pave the way for fintech and crypto banks and special purpose depository institutions (SPDIs). Kraken Bank applied for a master account with the Federal Reserve Bank in October 2020. In the Fed’s recent statement, Lael Brainard, the vice chair of the U.S Federal Reserve, is quoted explaining why the guidelines are needed.
“The new guidelines provide a consistent and transparent process to evaluate requests for Federal Reserve accounts and access to payment services in order to support a safe, inclusive, and innovative payment system,” Brainard said. Growing Requests for Access to Accounts
The growing requests for access to accounts — aka master accounts — stem from the rising number of institutions offering “new types of financial products” or those with novel charters. According to the U.S. Federal Reserve, the new guidelines stipulate that institutions with federal deposit insurance will be subjected “to a more streamlined level of review.”
On the other hand, for institutions adjudged to be engaged in novel activities or those for which an “appropriate supervisory and regulatory framework” is yet to be formulated, a more extensive review would be required, the statement said.
In June, Custodia Bank (formerly Avanti) sued the Federal Reserve Board of Governors over an alleged “unlawful delay” of the company’s master account application. Similar to Kraken, Custodia also applied for a Fed master account in October 2020, and it has been waiting 21 months for an answer since the filing. Tags in this story Avanti, Crypto Banks, Custodia, Federal Register, Federal Reserve Board, Fintech, Kraken, kraken bank, Lael Brainard, Master Accounts, payment services, payment system, regulatory framework, Reserve Bank, The US Federal Reserve
What are your thoughts on this story? Let us know what you think in the comments section below. Terence Zimwara
Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route. Bank of Russia Aims for Full Launch of Digital Ruble in 2024 FINANCE | 4 days ago Philippines’ Unionbank to Support Cryptocurrency Exchange via Mobile App FINANCE | 5 days ago
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