Fed Lifts Crypto Restrictions for Banks in Landmark Shift Toward Digital Assets
In a major policy reversal, the Federal Reserve Board has lifted crypto restrictions for banks, signaling a landmark shift toward digital assets and a more innovation-friendly regulatory environment. The move aims to realign oversight with the evolving risk landscape and encourage responsible participation in the crypto space by traditional financial institutions.
Key Policy Changes
As part of this transformation, the Fed has officially rescinded its 2022 supervisory letter that required state member banks to notify regulators of any crypto-related activities. Going forward, banks will no longer need to submit advance communications when engaging with digital assets.
Additionally, the central bank revoked its 2023 directive on stablecoin oversight, eliminating the need for prior approval through the non-objection process. These activities will now be regulated under standard supervisory frameworks—removing a major bureaucratic hurdle for financial institutions exploring crypto services.
Collaboration and Forward-Looking Strategy
The Fed also announced it will withdraw from two joint statements issued alongside the FDIC in 2023. These prior communications had advised caution on crypto-asset exposures and established initial guardrails. Moving forward, the Fed will collaborate with other agencies to determine whether updated guidance is necessary to foster innovation in the banking sector’s approach to digital assets.
A Broader Regulatory Shift
This landmark decision comes on the heels of similar actions by other federal regulators. Earlier this month, the Office of the Comptroller of the Currency (OCC) rolled back its own restrictions on banks’ involvement in crypto, further validating this new regulatory direction.
The rollback of crypto constraints also addresses past concerns raised during what was dubbed “Operation Chokepoint 2.0”—a period during which crypto firms alleged they were denied access to banking services due to their association with digital assets.
Growing Momentum for Crypto
The Fed’s decision is part of a wider pro-crypto trend under the Trump administration. In recent weeks, the Department of Justice (DOJ) announced it would cease pursuing criminal cases related to regulatory violations in the crypto space. This was followed by the disbanding of the DOJ’s National Cryptocurrency Enforcement Team (NCET) and staffing reductions in both the SEC’s crypto enforcement division and the CFTC’s digital asset task force.
With the Fed lifting crypto restrictions for banks in a landmark shift toward digital assets, institutional engagement with cryptocurrencies is poised to grow significantly in the coming months.
