Bill to grant crypto firms access to Federal Reserve alarms experts

Even before the latest meltdown, the Federal Reserve had been reluctant to grant master accounts to crypto-focused banks. In Custodia’s case, Federal Reserve Chair Jerome H. Powell has cited his concerns about unleashing a tide of other crypto companies offering banking services while lacking federal insurance backstop.

“If we start granting these, there will be a couple hundred of them soon,” Powell told Lummis when she pressed him on the matter at a January congressional hearing.Under Wyoming law, those banks can put their reserves into more volatile assets than their federally regulated counterparts — such as corporate and municipal debt — which could prompt a run if they suddenly lose value, said Lee Reiners, a former Fed official who now runs Duke University’s Global Financial Markets Center.

Proponents counter that giving more firms access to the central bank’s payments infrastructure will have the opposite effect, shoring up the crypto economy by giving federal overseers a better view of its activity. “Giving more regulated financial institutions access to the payment system reduces risk because it allows more visibility into who owes what,” a Lummis aide said. “And if there’s a systemic crisis, if a bank were to fail, there wouldn’t be as many ripple effects in the economy.

The company, founded by Morgan Stanley veteran Caitlin Long, set up shop in Wyoming in 2020 to take advantage of special rules the state adopted the year before to attract firms looking to mix traditional banking activities with crypto transactions. Shortly after securing its state charter, it applied for a Fed master account.

The Fed is in the midst of developing standards for granting master accounts, a process whose murkiness has drawn criticism from Republicans in Congress.The matter took center stage earlier this year in a partisan fight over the nomination of Sarah Bloom Raskin to serve as the Fed’s top financial regulator. Raskin served on the board of Reserve Trust, a Colorado payments company, when it secured a master account in 2018 after being denied one a year earlier.

matthewstoller Why is Gillibrand a paid lobbyist for the Crypto Industry?

In other news, I’m starting a currency based on dog poop. Gonna call it Crapto. Better hurry and get yours now, ‘cause I’m running outta bags.

'A new Senate bill would help crypto...' I thought Republicans hated reckless spending. 🎪🤥

The Charles Ponzi Memorial Act...

Fuq that.

Staggeringly bad idea

smdiehl This 'decentralized' currency needs the Central Bank?

What happened to DECENTRALIZATION

smdiehl LOL I love that that image make Lumis look crazy as fuck

Some say that would be destabilizing. It would.

What a shortsighted horrible idea.

THIS IS BS. Y'ALL KNOW IT WAS A GIANT GRIFT RIGHT?

I still say when Supreme Court Judges become political they should be removed from the bench. Out of the three branches of the Government why do they have life time terms? I don’t see anywhere in the Constitution that says it!

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