The Board of Governors of the Federal Reserve System (“Board”) issued a policy statement interpreting section 9(13) of the Federal Reserve Act and set out a “rebuttable presumption that it will exercise its discretion under that provision to limit state member banks to engaging as principal in only those activities that are permissible for national banks—in each case, subject to the terms, conditions, and limitations placed on national banks with respect to the activity—unless those activities are permissible for state banks by federal statute or under part 362 of the Federal Deposit Insurance Corporation’s regulations.” The Board also reiterated to state member banks that “legal permissibility is a necessary, but not sufficient, condition to establish that a state member bank may engage in a particular activity. A state member bank must at all times conduct its business and exercise its powers with due regard to safety and soundness.” The policy statement severely restricts “crypto-asset-related” activities and imposes new standards and requirements for all activities of state member banks “as principal.” The Board provides examples of how the policy statement would be applied to certain crypto-asset-related activities in its statement.
The Board believes that “the same bank activity, presenting the same risks, should be subject to the same regulatory framework, regardless of which agency supervises the bank. This principle of equal treatment helps to level the competitive playing field among banks with different charters and different federal supervisors, and to mitigate the risks of regulatory arbitrage.” By issuing this statement, the Board is setting out a clear expectation that state member banks look to federal statutes, OCC regulations, and OCC interpretations to determine whether an activity is permissible for national banks. If a state member bank wishes to engage in an activity that is not permissible for a national bank or for an insured state bank under the FDIC’s Part 362, it may not do so unless it obtains the consent of both the FDIC and the Board.
The Board’s policy statement became effective on February 7, 2023. To view the full policy statement on Section 9(13) of the Federal Reserve Act, please click this link.