The Federal Reserve removed outdated crypto banking restrictions, paving the way for innovation, broader access, and mainstream digital asset adoption.
Crypto Banking Unleashed: Fed Joins Regulators in Crushing Old Guard Restrictions
The Federal Reserve Board announced Thursday that it has withdrawn previous supervisory guidance related to banks’ crypto-asset and dollar token activities, a move intended to better align oversight with emerging risks and foster innovation within the financial sector. The decision marks a notable adjustment in how the central bank will approach digital assets going forward. This followed Fed Chair Jerome Powell’s recent statement that the Federal Reserve would loosen rules on cryptocurrencies.
Among the changes, the Board rescinded its 2022 supervisory letter that had required state member banks to provide advance notification regarding planned or current crypto-asset activities. Instead, oversight will now be integrated into the standard supervisory process. The announcement states:
As a result, the Board will no longer expect banks to provide notification and will instead monitor banks’ crypto-asset activities through the normal supervisory process.
Additionally, the Board revoked its 2023 supervisory letter concerning a supervisory nonobjection process for engagement in dollar token activities. Indicating a willingness to revisit its approach as necessary, the Federal Reserve Board explained: “The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate.”
The decision follows similar moves by U.S. banking regulators. The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) recently withdrew crypto-related guidance issued during the Biden administration. In response to the Federal Reserve’s announcement, the U.S. Senate Banking Committee Republicans praised the action, writing on social media platform X:
Chairman Tim Scott applauds the Federal Reserve for following the OCC and the FDIC in taking the much needed action to rescind harmful Biden-era guidance that reduced access to financial services for the digital asset industry.
White House crypto czar David Sacks also commented on X: “It’s great to see the Federal Reserve reversing Biden-era rules that were created as part of Operation Chokepoint 2.0. Opening up banking to crypto will help drive further mainstream adoption.” The coordinated steps by federal agencies suggest a broader shift toward a regulatory environment that encourages innovation while maintaining oversight.