The Federal Reserve has introduced a pioneering program that combines artificial intelligence or AI and crypto oversight within the banking sector.
How the Federal Reserve Balances AI and Crypto in Banking
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This new AI and crypto initiative, unveiled yesterday, seeks to strike a balance between harnessing the potential benefits of financial technology and ensuring the stability and integrity of the banking system. The core objective of the AI and crypto program revolves around fostering the advantages brought forth by AI and crypto innovations, while concurrently identifying and effectively managing associated risks. The Federal Reserve emphasized its commitment to ensuring the resilience of the banking system as it navigates the rapidly evolving landscape of digital assets and distributed ledger technology. This integration of AI and crypto oversight will be seamlessly woven into the existing supervisory processes of the Federal Reserve. Industry experts specializing in AI and crypto will collaborate closely with the current supervisory teams, bolstering the oversight of banks engaging in activities involving crypto-assets and blockchain technology.
Federal Reserve’s AI and Crypto Guidelines for State Banks
Crypto Confidence: Federal Reserve’s New AI-Backed Oversight Enhances Banking Sector (PHOTO: Ant Rozetsky)
As part of this comprehensive initiative, the Federal Reserve has also issued guidelines aimed at promoting the secure and responsible engagement of state banks under its supervision in specific dollar token or stablecoin activities. Banks seeking to participate in these activities will be required to demonstrate their readiness to conduct them securely and soundly, adding an additional layer of scrutiny to the crypto-driven endeavors within the banking sector. This development marks another step forward in the Federal Reserve’s ongoing commitment to transparency and proactive regulation as it navigates the intertwining realms of AI and crypto. This AI and crypto initiative follows the policy statement issued earlier this year, which clarified the permissible bounds of certain activities, striving to level the playing field for banks under federal supervision.
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