Federal Reserve Ends Crypto Banking Oversight Program

The Federal Reserve announced the termination of its novel-activities supervisory program, which was designed to monitor banks’ involvement in crypto and FinTech. The decision comes after the Fed gained sufficient understanding of these activities and their risks, allowing for a return to standard supervision. This change aligns with the evolving regulatory landscape and the increasing acceptance of crypto in traditional finance.

Fed Chair Jerome Powell emphasized the industry’s maturation during recent Congressional hearings, stating that banks are free to engage in crypto activities as long as they maintain safety and soundness. He also endorsed legislative efforts to establish a clear regulatory framework, particularly for stablecoins. The move follows similar actions by other U.S. agencies, including the OCC and FDIC, to relax restrictions on crypto banking.

The rescission of the 2023 advisory letter marks a significant step toward normalizing crypto activities within the banking sector. This shift is expected to reduce regulatory burden, encourage innovation, and ensure consistent treatment of bank activities regardless of underlying technology. The decision reflects a broader trend of regulatory adaptation to the growing crypto economy.

Federal ReserveCryptoBankingRegulationFinTechSupervisionJerome PowellStablecoinBlockchainFinance