Page 7 - October 24, 2024 Bulletin

aRTiCLeS

FHFA added that it recognizes the importance of the FHLBank dimes, quarters, half-dollar and dollar coins when done without
system’s function as a source of liquidity for its members – including fraudulent intent and done consistently with federal law. However,
small, community-based financial institutions – and that it expects there is a regulatory prohibition against melting pennies and
FHLBanks to continue in that role. “This role is particularly nickels, based in part on the fact that the cost of producing the
important during periods of market stress, such as during the coins currently exceeds their face value. Requests for licenses to melt
regional bank failures of March 2023,” the agency said. mutilated pennies and nickels must be submitted to the U.S. Mint.

Read more: https://www.fhfa.gov/sites/default/files/2024-09/AB- Read more: https://www.federalregister.gov/
2024-03_FHLBank-Member-Credit-Risk-Management.pdf documents/2024/09/25/2024-21936/exchange-of-coin

FHFA Proposes Modifying Federal Cryptography Guidance Outlines

Home Loan Bank Liquidity Process for Banks to Strengthen
Requirements IT Security

The Federal Housing Finance Agency has announced a proposed A new whitepaper provides guidance for banks and other financial
rule to amend its regulation on Federal Home Loan Bank capital institutions to help secure their computer systems as new threats
requirements to modify limits on FHLBank extensions of unsecured emerge, such as those from quantum computing.
credit in their on- and off-balance sheet and derivative transactions. The paper by the Financial Services Information Sharing and
The agency said the change will provide the FHLBanks with more Analysis Center, or FS-ISAC, provides financial firms a framework
flexibility in liquidity management.
to improve their “cryptographic agility,” which measures an
Currently, overnight federal funds are excluded from the more organization’s ability to adapt cryptographic solutions or algorithms
restrictive “general limit” on unsecured credit to a single counterparty quickly and efficiently in response to new developments and
and are limited only by the higher “overall limit,” according to FHFA. threats. FS-ISAC warns that the move to crypto agility must begin
The proposed rule would add interest-bearing deposit accounts, or immediately as quantum computing is likely to make a commonly
IBDAs, and other authorized overnight investments to that exclusion, used class of cryptography algorithms insecure in the next few years.
which may provide greater flexibility and improved cost to yield than “The financial services sector cannot risk insecure data transmission
overnight federal funds. It also clarifies terms for the FHLBanks to or storage – it would break the way we conduct business today,”
determine limits on unsecured credit to counterparties.
FS-ISAC says in the whitepaper. “And as the number of systems,
“These modernizations will create more flexibility for the FHLBanks dependencies between systems and overall technical complexity
in their liquidity management, which will allow them to better serve grow, the effort to update cryptographic assets has intensified.”
their members, particularly during periods of market stress,” FHFA The first part of the paper describes what is new and distinctive
Director Sandra Thompson said.
about crypto agility, according to FS-ISAC. The second part offers
Public comments on the proposed rule are due 60 days after more detailed information for technologists and other IT and
publication in the Federal Register. security specialists at financial institutions. The paper seeks to help
stakeholders across organizations “understand the problem space,
Read more: https://www.fhfa.gov/regulation/federal-register/
proposed-rulemaking/unsecured-credit-limits-for-federal-home- grasp the necessity of crypto agility, and define an approach that
loan-banks works for their institutions.”
Read more: https://www.fsisac.com/hubfs/Knowledge/PQC/
U.S. Mint Officially Ends Mutilated BuildingCryptographicAgilityInTheFinancialSector.pdf
Coin Exchange Program FinCEN Updates Beneficial

The U.S. Mint published a final rule officially ending a program that Ownership Information FAQs
redeemed bent and partial coins for full face value. The Mutilated
Coin Redemption Program was suspended in 2018 because of FinCEN has updated its FAQs on beneficial ownership information
the cost and resources needed to identify counterfeit coins being reporting and added new questions. The FAQs are explanatory
submitted for redemption. The final rule permanently ends the only and do not supplement or modify any obligations imposed by
program. statute or regulation.

In an explanation about the program on its website, the U.S. Mint Read more: https://www.fincen.gov/boi-faqs
notes there is no statutory or regulatory prohibition on melting

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