The Federal Reserve Just Dismantled Its Targeted Crypto Oversight
The U.S. Federal Reserve Board announced on Aug. 15, 2025, that it will end its Novel Activities Supervision Program and reabsorb the oversight of crypto and fintech-related bank activities into its standard supervisory procedures. In a public statement, the Board confirmed:
The Federal Reserve Board on Friday announced that it will sunset its novel activities supervision program and return to monitoring banks’ novel activities through the normal supervisory process.
“Since the Board started its program to supervise certain crypto and fintech activities in banks, the Board has strengthened its understanding of those activities, related risks, and bank risk management practices. As a result, the Board is integrating that knowledge and the supervision of those activities back into the standard supervisory process and is rescinding its 2023 supervisory letter creating the program,” the announcement details.
Originally launched under supervisory letter SR 23-7 in August 2023, the program was designed to monitor novel banking practices including crypto custody, stablecoin issuance, tokenized assets, and API-based partnerships with nonbanks. It provided a risk-based framework that enhanced scrutiny of financial innovation, which had previously raised concerns about the adequacy of existing supervision tools. By folding this oversight back into its regular supervisory structure, the Fed intends to streamline operations without compromising its updated understanding of the unique risks posed by digital asset activities.
The move drew immediate praise from lawmakers and digital asset advocates. U.S. Senator Cynthia Lummis stated on social media platform X:
Big win for putting an end to Operation Chokepoint 2.0. The Fed announced it’s killing the targeted supervision of digital asset banking activities. There’s still more to do, but this is real progress toward a level playing field for crypto.
The House Financial Services Committee also supported the decision, posting: “The Committee applauds the Fed’s decision to sunset its Novel Activities Supervision program. Last Congress, the Committee sent a letter to the Fed expressing concerns with this program and the impact it would have on banks’ participation in the digital asset ecosystem. The Fed’s action will further the Trump Admin’s goal of integrating digital assets into the prudential regulatory framework and fostering a vibrant digital asset ecosystem for all participants.” Though some regulatory experts warn this may dilute protections as fintech adoption accelerates, digital asset supporters argue that unified treatment under standard supervision is critical to fostering growth and regulatory parity.