The U.S. Federal Reserve has announced a new program for overseeing banks’ crypto activities. The program further clarifies the requirement that lenders under its authority must obtain approval before engaging in digital assets activities.

The announcement does not change the existing crypto banking rules; it defines how the central bank intends to handle its oversight. This involves putting digital asset dealings under the new “novel activities supervision program”, in which the Fed’s experts in digital assets will work with the regulator’s regular supervisors.

Furthermore, the Fed has provided more details about the need for pre-approvals for banks engaging with stablecoins. Institutions that issue, hold, or transact in dollar tokens to facilitate payments must prove that they can do so in a “safe and sound manner”. This requires the Fed’s formal approval, which could be difficult to achieve as each bank must demonstrate that it can identify, measure, monitor, and control the risks of its activities, including money laundering, customer runs, and hackers.

U.S. banking regulators have made it clear that they intend to maintain a significant barrier between banking and the crypto sector, while still allowing banks to experiment under close supervision. The novel activities program will inform the banks when they will be under review. The level and intensity of supervision will depend on the level of engagement in novel activities by each supervised banking organization, according to the regulator.

The Fed believes that the new program will help ensure that regulation and supervision allow for innovations that improve access to and the delivery of financial services.