# What Increased Restrictions On State Banks Means For Crypto

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Last modified: 2023-01-30

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By Ivy Heffernan · 2023-01-30
Tags: Shayne Heffernan on Investments, Headline News, Top Stories, Crypto, Featured, 2023, Ivy Heffernan
Signed: no (published before platform launch).
Nothing in this article is investment advice.

State banks will now be under the authorization of National banks, unless the state legislation allows otherwise. Regarding Crypto, the Federal Register Notice says the following. 

"The Board has not identified any authority permitting national banks to hold most crypto-assets […] As principal in any amount, and there is no federal statute or rule expressly permitting state banks to hold crypto-assets as principal. Therefore, the Board would presumptively prohibit state member banks from engaging in such activity under section 9(13) of the [Federal Reserve] Act.”

The notice also talked about how banks would like to issue their own stablecoin, but the response wasn't favourable.

“The Board generally believes that issuing tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices.”

https://twitter.com/federalreserve/status/1619010218876362755?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1619010218876362755%7Ctwgr%5Ecc1ff5410461738acf1f714e8eb100382add3864%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Ffed-policy-to-align-bank-oversight-could-limit-crypto-activities-by-state-banks

This increase in regulations could put pressure on the Crypto market. Banks must also disclose their full Crypto plans and not engage in Crypto activities unless allowed by their national banks or legislation. The speculation of having banks issuing their own stablecoins could also puts pressure on the market to live up to their reputations as legitimate Crypto Firms, this could turn out to be beneficial as rugpullers will have a harder time entering the market.

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