David Portilla discusses crypto regulation with Banking Risk & Regulation
Davis Polk partner David Portilla was quoted in Banking Risk & Regulation on the Federal Reserve’s new “Novel Activities Supervision Program,” which is aimed at emerging technologies that could “materially impact the safety and soundness of banking organizations.” According to the article, banking and fintech experts have cautiously welcomed this new program investigating crypto and blockchain.
David agreed that the announcement is a significant development and said that banks can now proceed slowly with crypto-related activities including custody, loan, collateralization, purchases and sales services, as well as the use of stablecoins.
“I think [the Fed has] tried to provide a roadmap for how to think about engaging in these activities,” he said. “But they’ve provided more detail on some things, less detail on others.”
This announcement as well as other recent guidance and statements provides forward thinking on what activities the Fed views as regulatory compliant, David noted. “The way I read it, the door is closed for holding crypto on balance sheet — but for stablecoins and those other activities, the door is more ajar to varying degrees.”
“Fed’s crypto supervision plans welcomed by experts,” Banking Risk & Regulation (August 16, 2023)