The Federal Reserve has recently issued a new warning about the risk associated with cryptocurrency trading. However, as part of its joint statement, Fed officials have also made it clear that commercial banks are at liberty to offer crypto-related services.

To this end, the Fed has assured that banking enterprises are not prohibited or encouraged for providing crypto-related services.

The Fed officials have also made it clear that at present there are no regulations or legal restrictions that prevent commercial banks from facilitating crypto services.

On the other hand, the US Central Bank has also reiterated that Federal Reserve will continue to monitor and regulate all financial activities of the commercial banks including the monetary system.

Federal Reserve also Highlights the Risks Associated with Cryptocurrency

As per the latest remarks issued by Federal Reserve officials, commercial banks can face regulatory issues on account of their association with cryptocurrencies. The Central Bank officials have maintained that issuing cryptocurrencies, offering custodial services, or facilitating their exchange can lead to inconsistent banking practices for commercial banking enterprises.

At the same time, officials also talked about the holding of cryptocurrency wallets that may include the possession of private keys.

In case, the custodial services provider for commercial banks is third-party application like Revolut, it would mean that the commercial bank in question is not in direct possession of the said cryptocurrency reserves.

The green light for cryptocurrency services from Federal Reserve is not a big surprise as it followed the decree from BIS or Bank of International Settlement.

The BIS issued a new decree for its partner banks that they may add cryptocurrencies to their reserves between 1 and 2-tier capital limits. It means that BIS has made room for commercial banks to use crypto as a hedge.

It seems that in the future, crypto trading with banks would become more popular and commonplace. The Fed statement also indicates that commercial banks have complete autonomy with it comes to cash-settled Bitcoin futures that are issued by CME.

These recent changes suggest that crypto is heading towards mainstream adoption and centralized government agencies do not plan to act as a hindrance to the growth of crypto markets.