Fed Lifts Crypto Restrictions for Banks in Landmark Shift

The Federal Reserve Board announced Thursday the withdrawal of guidelines for banks related to their activities of cryptographic assets and Stablecoin, with modifications of its expectations for these commitments.

According to a press release, this decision aims to guarantee that its supervision approach remains aligned with risk evolution and to support innovation within the banking system.

Policy changes

As part of this change, the board of directors is cancelation His 2022 supervision letter. The directive had forced banks to members of the State to provide a prior notification of any activity of carrying out planned or in progress cryptography. Under the new rules, banks will no longer have to subject these communications.

The Fed also revokes a similar prescription from 2023 concerning the process not subject to the banks of the members of the State engaging in Stablecoin activities. This eliminates the requirement for financial institutions to obtain prior approval before participating in such activities.

Surveillance will now be standard regulatory supervision, without the need for pre-authorization

In addition, the Federal Reserve, as well as the Federal Deposit Insurance Corporation (FDIC), withdraws from two joint declarations issued in 2023 by regulatory agencies of federal banks. These communications had described the opinions of regulators on the risks associated with exposures to the failure of crypto and provided preliminary advice to banks operating on these markets.

After the adjustments, the Fed will now work with the agencies concerned to assess whether additional or updated advice are necessary to support innovation on activities related to crypto.

This strategy reversal comes only a few weeks after the office of the currency controller (OCC) made a similar decision. The federal banking regulator also back Restrictions which had limited the involvement of financial institutions with cryptographic assets.

Before the introduction of these policies, some industry figures claimed that they and their companies were refused traditional banking services only because of their association with the digital asset industry. These allegations constituted the basis of what was known as “Operation Chokepoint 2.0”.

Positive developments in industry

Thursday's decision is the last in a series of favorable results for cryptographic industry under the Trump administration. Earlier this month, the United States Ministry of Justice (DOJ) announced that it would no longer pursue criminal accusations for crypto exchanges, promoters or users involved in regulatory violations.

This development follows the dissolution of the National Cryptocurrency Application Team (NCET), a specialized DoJ unit which had previously managed criminal affairs linked to the crypto.

In February, Securities and Exchange Commission (SEC) reduced the size of its department responsible for cryptographic proceedings. The Commitoy Futures Trading Commission (CFTC) also reduced its digital asset application teams in January, leaving only two groups to manage the relevant cases.