State member banks are commercial banks that are chartered by a state government and have chosen to become members of the Federal Reserve System. These banks are subject to both state and federal regulation. They operate under the oversight of their state banking authority and the Federal Reserve, ensuring compliance.
Context
The involvement of state member banks in digital asset activities is a significant development for the integration of crypto into traditional finance. Their participation, often under the guidance of federal regulators, can lend credibility and regulatory clarity to certain digital asset services. This inclusion signals a gradual acceptance and a more structured approach to crypto within the established banking sector.
The Fed's removal of mandatory pre-approval for crypto activities streamlines bank compliance, enabling faster institutional product deployment under standard risk frameworks.
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