The Federal Reserve is pledging accurate digital asset guidance to accelerate efforts to eliminate regulatory grey zones and unlock innovations in crypto and next-generation financial technology.
FED targets ambiguity in digital asset rules as part of a broader overhaul
Superintendent Michelle W. Bowman, vice-chairman of the Federal Reserve, stressed on June 6th in Georgetown University’s Psoros Financial Markets and Policy that strengthening clarity regarding digital asset surveillance is a priority among the broader initiatives to modernize oversight and regulations.
In his first public speech as Vice-Chairman, Bowman outlined a practical, coordinated regulatory vision that incorporates innovation support. She emphasized that evolving supervisory guidance provides clearer expectations to promote digital asset activity and the safe adoption of artificial intelligence, particularly for banks exploring new financial technologies. Bowman noted that past director guidance inadvertently suppressed innovation by creating ambiguity.
The uncertainty in supervision’s expectations has long been a hindrance for banks engaged in digital asset activities and for banks seeking to innovate, including incorporating new technologies such as artificial intelligence to improve the efficiency and delivery of products and services.
She said the Federal Reserve must ensure that digital assets innovations are not curtailed by ambiguous or outdated supervisory material. She has reviewed existing guidance, including SR letters and third-party risk management protocols, and has committed to eliminating documents that hinder technical adoption without further advancing safety and soundness.
Referring to previous initiatives like the Fed’s “Opening Hours” session, Bowman said such forms should be rethinked to provide transparency on digital assets and to encourage constructive dialogue between regulators and financial institutions.
Looking ahead, Bowman emphasized the importance of enabling innovation without undermining careful surveillance. She said:
Just as it is essential for banks to innovate to stay competitive in the future, it is important that bank supervisors can enable new technology adoption in a way that is consistent with safety and soundness.
