Federal authorities have decided to scrap the planned program for overseeing innovative activities
The American Fintech Council has expressed its eagerness to collaborate with Michelle Bowman, the Fed Vice Chair for Supervision, as she continues to institute her pragmatic vision for innovation within the office.
This development comes after the Federal Reserve Board terminated a program established in 2023, known as the Novel Activities Supervision Program (NASP), which was designed to supervise banks' fintech and cryptocurrency activities. The termination of the program aligns with a shift in regulators' stance on cryptocurrency.
The Federal Reserve Board has gained a deeper understanding of fintech and cryptocurrency activities, related risks, and bank risk management practices since the inception of the NASP. The program aimed to enhance the Federal Reserve's technical expertise in understanding novel activities, associated risks, and appropriate controls to manage these risks.
Ian P. Moloney, the senior vice president and head of policy and regulatory affairs at the American Fintech Council, stated that NASP was critically important for innovative banks. He also expressed respect for the Federal Reserve's decision to fold NASP's functions into their general supervision activities.
The Novel Activities Supervision Program was established to promote financial innovation while managing risks to ensure the stability of the banking system. It was intended to inform the development of the Fed's supervisory approaches for banks engaging in novel activities, including distributed ledger technology.
The Trump administration has expressed support for artificial intelligence, which has become closely associated with bank and fintech innovation moves. However, the text does not discuss any alternative programs or initiatives that the Federal Reserve Board might implement to address fintech and cryptocurrency activities in banks.
As various perspectives on disrupting the banking sector exist, the specific details of these perspectives are not provided in the text. Moloney encouraged continued education of examiners on emerging technologies to ensure they can properly assess the risks associated with these technologies.
The Federal Reserve reincorporated the supervisory office for cryptocurrencies and fintech activities at banks back under its general supervision in 2023, but the exact date of this reintegration is not stated in the provided search results. The text does not provide information on the impact of the Federal Reserve Board's decision on the banking industry or the fintech sector.
The text does not mention any purchases of licensing rights. The future of fintech and cryptocurrency supervision within the Federal Reserve Board remains to be seen, as the focus now shifts towards integrating these activities into their general supervision processes.
