The Fed Shutter Group is a policy to encrypt banks.

The US Federal Reserve announced that it will close the “novel activities supervision program”, a group established to monitor the participation of the company in the Crypto space in 2023.

“The board of directors has started the program to supervise specific encryption and fintech activities at the bank, and the board has strengthened its understanding of these activities, related risks and bank risk management practices.” Notice.

Instead of the standalone initiative, the program is now “integrating knowledge and supervision of the activities into the standard supervision process,” said Fed Board. In addition, we will withdraw the 2023 director’s letter that created the program.

The Fed Program was created in the aftermath of the collapse of encryption in 2023.

The initiative was established five months after the collapse of three major US loan institutions in a close position with the cryptocurrency industry and technology startup, that is, Silvergate Bank, Silicon Valley Bank and Signature Bank.

The collapse began when the cryptographic prices began to fall due to the concern about the health of Silvergate after the collapse of the FTX, which was destroyed as of November 2022, as of November 2022.

At that time, Silvergate was deeply into the encryption industry, and about 90%of the deposits were related to digital assets.

The collapse of the FTX caused massive withdrawal, and Silvergate said it lost $ 8 billion in deposits. The bank also had to realize about $ 778 million in investments to cover withdrawal.

Silvergate Bank shares have caused great rhythms as they have to sell their assets due to losses to cover billions of encryption withdrawal due to the collapse of the FTX. Silvergate collaborates with many major encryption companies, such as Circle, Coinbase, FTX, Alameda, Genesis. pic.twitter.com/g5whefpqsk

-Geralt Davidson T (@cryptoinsider23) January 19, 2023

The panic of Silvergate Bank was spread to silicon valley banks (SVB), which was not much involved in the encryption space, but it felt the impact of the collapse of the silver gate due to the exposure to many technical startups and VC support companies overlapping with companies in the digital asset industry.

The panic finally flowed down to the signing bank.

At some point, the withdrawal of Signature Bank reached $ 10 billion a day, and the bank had to close the SIGNET product, which is a payment network between banks that exchanges such as Coinbase. Reduction of liquidity in encryption space.

The regulatory agency selects a softer approach to Trump’s encryption supervision.

Although the closure of the novel supervision program does not necessarily indicate the size of the supervision of the relationship with the encryption company, it occurs under the trend of US government agencies that alleviate the supervision of the cryptocurrency industry under the administration of Donald Trump.

From the beginning of the year, the US Securities and Exchange Commission (SEC) has withdrew some investigations and execution measures to cryptographic companies. Paul Atkins, chairman of the SEC, also announced the “Project Crypto” initiative of the agency to alleviate the license requirements for the Crypto company.

Atkins said yesterday that the agency was “mobilizing” to “other departments and office” to implement Trump’s encryption work group.

Atkins talks to Fox Business (Source: Fox business))

“It includes the rules adjustment that has been around 90 years,” he said.

“We do not want encrypted assets to be in the flash drive from someone’s drawer.” “They must be in a safe place. The reason for doing all of this and solving these various regulations is to provide people with certainty.”

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