Fed warns banks could become irrelevant if they ignore blockchain adoption now

Federal Reserve Vice Chair for Supervision Michelle Bowman has called for banks to clasp blockchain exertion oregon hazard losing relevance.

At the Wyoming Blockchain Symposium connected Aug. 19, Bowman emphasized that regulators and banks indispensable follow a much proactive attack to the crypto industry.

She pointed retired that integrating these caller innovative technologies would beryllium important for maintaining relevance successful a rapidly evolving fiscal landscape.

She said:

“It is indispensable that banks and regulators are unfastened to engaging successful caller technologies and departing from an overly cautious mindset. Regulators indispensable recognize caller products and services and admit the inferior and necessity of embracing exertion successful the accepted fiscal sector.”

The Fed enforcement argued that this displacement is not optional but indispensable for the continued vitality of the banking system. She added that institutions that neglect to germinate could go peripheral players, portion forward-looking banks could fortify their presumption successful the market.

Tokenization arsenic an contiguous usage case

Bowman highlighted tokenization arsenic 1 of the astir contiguous applications of blockchain. She explained that tokenized assets tin beryllium transferred digitally without intermediaries oregon the carnal question of securities.

She said the attack eliminates galore manual steps and custodial coordination that presently creates delays and increases operational risk.

Moreover, Bowman noted that tokenized systems tin streamline these steps, trim operational friction, and grow marketplace access.

Due to this, the Fed main noted that regulatory alignment could determination tokenization from aviator projects to mainstream adoption that would payment some large banks and smaller assemblage institutions.

Fraud prevention

Beyond tokenization’s efficiency, Bowman highlighted blockchain’s imaginable to combat fraud.

In the speech, she conceded that fiscal institutions look risks from individuality theft, scams, and related crimes.

However, she argued that if blockchain tin measurably trim fraud, regulators should facilitate its adoption alternatively than impede it.

According to her:

“If fraud tin beryllium addressed utilizing caller technology, we should marque definite that the regulatory model does not basal successful the way. I spot this arsenic an breathtaking accidental for collaboration betwixt manufacture and the Fed.”

The station Fed warns banks could go irrelevant if they disregard blockchain adoption now appeared archetypal connected CryptoSlate.