The standard supervisory process describes the routine procedures and frameworks employed by regulatory authorities to oversee financial institutions. This involves regular examinations, risk assessments, and compliance reviews to ensure that banks and other regulated entities adhere to applicable laws, regulations, and sound operational practices. In the context of digital assets, it outlines how supervisors evaluate an institution’s activities related to cryptocurrencies, stablecoins, and blockchain technology, focusing on areas such as risk management, consumer protection, and anti-money laundering measures. It provides a consistent approach to oversight.
Context
Applying the standard supervisory process to digital asset activities is a continuous challenge for regulators as the technology evolves rapidly. Discussions frequently center on adapting existing frameworks to address the unique risks and characteristics of digital assets without stifling innovation. Future iterations of this process will likely incorporate specialized expertise and more granular guidelines tailored specifically for the digital asset sector.
The Federal Reserve's withdrawal of pre-approval letters normalizes crypto oversight, integrating digital asset activities into standard bank risk management protocols.
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