The US Federal Reserve plans to expedite applications from cryptocurrency banks for master accounts, as the current system is not suitable for institutions offering cryptocurrency services.
Under new banking industry surveillance rules introduced by the US Federal Reserve (Fed), institutions offering new types of financial products may be granted master accounts, a key financial status that allows direct payments and access to the Fed. So far, all federally registered banks have a master account.
The Fed hopes the new rules will help streamline the application process for cryptocurrency banks such as Custodia and Kraken. Recall that Custodia, founded by former Morgan Stanley managing director Caitlin Long, sued the Fed in June over a 19-month delay in processing a master account application, while the average processing time for such an application was 5 to 7 business days.
The delay was due to the Fed’s uncertainty about how to grant traditional banking powers to such cryptocurrency institutions.
“The new guidelines provide a consistent and transparent process for evaluating applications for Federal Reserve accounts and access to payment services to support a secure, inclusive and innovative payment system,” said Fed Vice Chair Lael Brainard.
Earlier, Brainard called for stricter regulation of the crypto industry, as the situation with the wave of defaults by cryptocurrency companies requires closer oversight of the sector.
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