On January 27, 2023, the Board of Governors of the Federal Reserve System issued a policy statement exercising its authority under section 9(13) of the Federal Reserve Act to limit the activities of state member banks and their subsidiaries in a manner “consistent with section 24 of the Federal Deposit Insurance Act.” The policy statement establishes a rebuttable presumption that state member banks may engage as principal in only those activities that are permissible for national banks, unless those activities are permissible for state banks by federal statute or under Part 362 of the FDIC’s regulations. In addition, to the extent that there are conditions to a national bank’s engagement in an activity, the policy statement requires state member banks to comply with the same conditions, including submitting to Federal Reserve supervisory staff the same notice that national banks must submit to OCC supervisory staff prior to engaging in such activities. The statement also reminds state member banks that legal permissibility is a necessary, but not sufficient, condition to establish that a state member bank may engage in a particular activity, and that state member banks must at all times conduct their business and exercise their powers with “due regard” to safety and soundness. Although the policy statement appears designed to restrict severely crypto-asset-related activities, its breadth could impose additional procedural requirements and substantive limitations on the conduct of all activities as principal, regardless of the nature of those activities.
 
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