Fed Eases Restrictions on Banks’ Crypto Activities

The Federal Reserve has eased rules that had limited U.S. banks from engaging in cryptocurrency services, overturning a 2023 policy that required prior approval for activities such as custody, tokenization, and stablecoin operations. The move reflects a broader shift toward fostering responsible innovation in banking.

Under the previous guidance, regulatory uncertainty discouraged banks from exploring digital-asset services

The new framework treats crypto activities like any other banking operation, giving institutions more flexibility while maintaining oversight to manage risk. While banks remain accountable for managing risks associated with cryptocurrencies, they now have greater flexibility to explore new financial products and services.

Bank executives and crypto advocates welcomed the change, noting it could expand access to crypto services and support adoption in the U.S. financial system

Analysts caution, however, that growth will depend on how banks implement these offerings and how regulators enforce risk management standards.

The Fed’s action follows similar steps by the FDIC and the Office of the Comptroller of the Currency, which have eased earlier warnings on crypto operations

Why This Matters

The policy shift could strengthen the integration of cryptocurrencies into mainstream finance and influence other jurisdictions, balancing innovation with financial stability.

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People Also Ask:

What did the Federal Reserve change regarding banks and crypto? The Fed withdrew its 2023 guidance that limited banks from offering cryptocurrency services, allowing banks to engage in crypto activities under standard supervisory oversight.

Does this mean banks can take unlimited risks with crypto? No. Banks remain accountable for managing risks and must comply with the Fed’s standard supervisory processes, including risk management and reporting.

How does this affect the U.S. financial system? The change may increase access to crypto services, support adoption of digital assets, and encourage innovation while maintaining financial stability.

Which crypto activities are affected? Activities such as custody of digital assets, tokenization, and stablecoin-related services are now subject to regular banking supervision rather than special approval requirements.

What is the Federal Reserve’s role? The Fed supervises banks and sets policies to ensure financial stability, including overseeing how banks handle crypto activities.

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