Matching market expectations, the Federal Reserve's Federal Open Market Committee (FOMC) hiked its benchmark Federal Funds rate by 25 basis points to a range of 4.5%-4.75%.

Private hiring slowed to its weakest level in 2 years, according to the ADP National Employment Report, with just 106,000 jobs added in January. In addition, the manufacturing sector continued to contract, with the ISM Manufacturing Survey for January dipping to 47.4.

Banks supervised by the Board will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities.

The United States Federal Reserve Board announced Jan. 27 that it was issuing a policy statement on limitations on banks. The policy seeks to create a level playing field and limit regulatory arbitrage for state banks with deposit insurance, state banks without deposit insurance and national banks, which are overseen by the Office of the Comptroller of the Currency (OCC), by allowing them the same scope of permissible activities.

The Federal Reserve Board has rejected Custodia Bank’s application to become a member of the Federal Reserve System. In its announcement, the Fed stated that the application was “inconsistent with the required factors under the law.” It also claimed Custodia had an “insufficient” management framework and cited an earlier joint declaration by the Fed with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency that found crypto assets to be at odds with sound banking practices. 

The economy may tip into recession as the Fed raises interest rates past February, predicts the analyst.

Former Federal Reserve Chairman Alan Greenspan says crypto is “too dependent on the ‘greater fool theory’ to be a desirable investment.” However, he noted that the collapse of crypto exchange FTX was “purely fraud,” rather than the result of a feature inherent to crypto. He does not expect the FTX contagion to spread far beyond the crypto space.

The price of Bitcoin dipped following the release of the Federal Reserve’s December meeting minutes, which showed the central bank’s plans to continue raising interest rates.

The Federal Reserve, FDIC and OCC have warned banks in the United States on ‘key risks associated with crypto assets and crypto asset sector participants.’

In a Twitter thread on Dec. 20, Jim Bianco, head of institutional research firm Bianco Research, said that the Federal Reserve would not “pivot” on rate hikes next year.