SEC panel votes in favor of proposal that may make it more difficult

By a vote of 4-1, a panel of the United States Securities and Exchange Commission (SEC) decided to approve a proposal that, if implemented, would make it more difficult for companies that deal in cryptocurrencies to act as custodians of digital assets in the future. This proposal could make it more difficult for companies to act as custodians of digital assets. There were five people on the panel altogether.

According to a statement that was issued by SEC Chairman Gary Gensler on February 15, the proposal, which has not yet been officially approved by the SEC, recommends amendments to the “2009 Custody Rule” that will apply to custodians of “all assets,” including cryptocurrencies. This rule will apply to custodians of “all assets,” including cryptocurrencies, according to the statement. The “2009 Custody Rule” would be updated to include these modifications.

According to Gensler, at the current moment there are a number of cryptocurrency trading platforms that are not in reality “qualified custodians” despite the fact that they are promoting the provision of custody services.

According to the Securities and Exchange Commission (SEC), a qualified custodian is typically a bank or savings association that is federally or state-chartered, a trust company, a registered broker-dealer, a registered futures commission merchant, or a financial institution that is located outside of the United States. In addition, a qualified custodian must be able to demonstrate that it meets the requirements of the SEC.

These custodians will be required to jump through additional hoops such as annual audits from public accountants, among other transparency measures, as part of the newly proposed rules. In addition, U.S. and offshore companies will be required to ensure that all custodied assets, including cryptocurrencies, are properly segregated in order to become a “qualified custodian.” These new rules were proposed by the Financial Stability Oversight Council (FSOC). To achieve the status of “certified custodian,” businesses based in the United States or abroad would further be required to guarantee the safety of any assets under their care.


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Fed report examines CBDC compensation and convenience

The Federal Reserve Board of the United States, in a report that was made public on November 17th, stressed the significance of compensation in relation to the development of a digital currency issued by the central bank (CBDC). The theoretical literature on CBDCs in large, industrialized nations, with a primary focus on the United States, is investigated in this essay that is part of the Finance and Economics Discussion Series published by the Federal Reserve. It investigates the potential benefits and drawbacks of instituting a CBDC for the banking system, with a special emphasis on the crucial function that CBDC design plays in the execution of monetary policy and compensation (interest payments).


The authors come to the conclusion that a CBDC may help in the management of the Fed’s balance sheet by making the holding of CBDCs more or less attractive in comparison to bonds, and that the establishment of such a CBDC may also help in the control of bank disintermediation. According to the authors, “remuneration is without a doubt the key design aspect that any central bank would desire to study.” The following is what they then state:


Because CBDCs do not accrue interest, their only purpose is to act as a medium of exchange, and their value is almost completely predicated on their acceptability as a means of payment. In contrast, the rate of compensation for a CBDC might be used as a tool for policy in addition to making the CBDC more appealing as a vehicle for wealth accumulation. This would be in addition to the goal of making the CBDC more desirable.

Either proportional interest that is reported as a percentage or tiered interest that increases or decreases in a nonlinear reaction to the value of a holding may be used as a policy instrument. Tiered interest is more common.


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US Federal Reserve bank at the helm of CBDC research effort appoints new president

The Federal Reserve Bank of Boston, or Boston Fed, has selected economist Susan M. Collins, University of Michigan provost, to serve as its new president and chief executive officer.

The seat has become vacant in September 2021, when the then-president Eric Rosengren expedited his retirement amid a controversy around his securities trading while in office. Collins, who is Jamaican-American, will become the first Black woman in the Fed’s history to lead a Federal Reserve Bank. She will assume office on July 1.

The Boston Fed is one of 12 regional branches of the Federal Reserve. Along with the Fed’s Board of Governors and the Federal Open Market Committee, or FOMC, the Federal Reserve Banks participate in the development of U.S. monetary policy. The Boston Fed president is also one of the five regional Reserve bank leaders who serve as voting members on the FOMC, the body responsible for setting interest rates.

As Cointelegraph reported, the Boston Fed, in partnership with the Digital Currency Initiative at the Massachusetts Institute of Technology, has recently completed the first stage of Project Hamilton – a research initiative aimed at developing and testing a hypothetical central bank digital currency (CBDC) design.

As an academic, Collins studied development economics, exchange rate regimes, and macroeconomic imbalances. During her career, she has not made public statements related to CBDCs or digital assets in general. Also, little is known about her monetary policy views: According to a Reuters report, in a 2019 interview Collins spoke in favor of raising the Fed’s 2% inflation target.