US Federal Reserve Board Unveils Final Guidelines Used When Reviewing Requests for Access to Master Accounts – Finance Bitcoin News

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.

These Guidelines Are Designed to Establish a Consistent and Transparent Set of Factors in 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. Once published in Federal Register, the new guidelines will be effective.

This move may open the door to fintech, crypto and other special purpose deposit institutions (SPDIs). Kraken Bank applied to the Federal Reserve Bank for a master bank account 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 Demands for Account Access

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. Like Kraken, Custodia applied for a Fed Master Account in October 2020. It has waited 21 months to receive an answer.

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Terence Zimwara

Terence Zimwara was a Zimbabwe award-winning journalist and writer. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.