The Federal Reserve has retracted prior guidance that discouraged banks from engaging in cryptocurrency and stablecoin activities, signaling a shift toward supporting innovation in the sector.
The rescinded guidelines, issued in 2022 and 2023, had warned banks about the risks of crypto, including volatility, liquidity, and legal challenges.
Industry leaders like Michael Saylor and Alex Svanevik view this move as a positive development for Bitcoin and stablecoins, with banks now freer to explore these markets.
Despite the softened stance, the Fed emphasized that regular banking oversight will still apply to crypto-related activities.
Bitcoin has reclaimed the $93,700 level, marking a 14% rebound from its March lows, with short-term holders (STHs) flipping into profit for the first time since February.
Whale accumulation and a shift in market sentiment have fueled Bitcoin’s bullish momentum, with the path now clear for further price discovery.
A Shift in Regulatory Stance: The Fed’s New Approach to Crypto
In a significant policy reversal, the Federal Reserve has withdrawn its earlier guidance that discouraged banks from engaging in cryptocurrency and stablecoin-related activities. This move, announced on April 24, 2025, reflects a broader effort to align regulatory expectations with the evolving risks and opportunities in the financial sector. The Fed stated that the decision was made to “support innovation” and ensure that the banking system remains adaptable to emerging technologies.
The rescinded guidelines, issued in 2022 and 2023, had been a collaborative effort between the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). These directives had warned banks about the inherent risks of dealing with crypto assets, including their volatility, liquidity challenges, and potential legal complications. However, the Fed’s latest move signals a more open-minded approach, allowing banks to explore the crypto space under standard supervisory processes.
This policy shift has been met with enthusiasm from the crypto industry. Michael Saylor, co-founder of MicroStrategy, hailed the decision as a win for Bitcoin, stating that banks are now free to support the cryptocurrency. Similarly, Alex Svanevik, CEO of blockchain analytics firm Nansen, noted that the update paves the way for banks to enter the stablecoin market, marking a significant step toward integrating crypto into traditional finance.
The Role of Other Regulators: A Broader Pro-Crypto Trend
The Federal Reserve’s softened stance is part of a larger trend among U.S. regulators. In March, the OCC was the first to signal a shift in its approach, stating that banks could handle crypto and stablecoins under certain conditions. Shortly thereafter, the FDIC launched an investigation into the controversial practice of “crypto de-banking,” which had gained traction under the Biden administration. These developments suggest a growing recognition of the need to balance innovation with risk management in the financial sector.
Under the Trump administration, the crypto industry had enjoyed a period of regulatory relief, which allowed for significant growth and experimentation. The recent actions by the Fed, OCC, and FDIC indicate a return to a more supportive regulatory environment, albeit with safeguards in place. However, not all anti-crypto measures have been rescinded. Caitlin Long, founder of Custodian Bank, pointed out that one piece of anti-crypto guidance from 2023 remains in effect. She emphasized that passing stablecoin legislation could be key to overturning this lingering restriction.
While the regulatory landscape is far from settled, the recent moves by U.S. agencies represent a significant step forward for the crypto industry. By allowing banks to engage with crypto assets under normal supervisory processes, regulators are signaling a willingness to adapt to the realities of a rapidly evolving financial ecosystem.
Bitcoin’s Price Surge: A Reflection of Renewed Confidence
The regulatory shift has coincided with a strong rebound in Bitcoin’s price, which has climbed to $93,700, marking a 14% recovery from its March lows. This resurgence follows a challenging first quarter, during which Bitcoin experienced an 18% drawdown in February, pushing its price to a low of $77,000. The market correction was driven by short-term holder (STH) capitulation, resulting in a spike in realized losses.
Despite these challenges, whale accumulation persisted, fueled by macroeconomic uncertainty and a renewed appetite for risk. This influx of capital catalyzed a bullish rally, breaking through key resistance levels and triggering a cascade of liquidations in leveraged positions. The result has been a decisive shift in market sentiment, with Bitcoin now trading above its STH cost basis for the first time since mid-February.
This recovery has significant implications for short-term holders, who have flipped into profit territory after weeks of being underwater. The psychological impact of this shift cannot be overstated, as it serves as a critical “fear of missing out” (FOMO) trigger. With momentum building, many short-term investors are likely to hold onto their positions in anticipation of further gains, reinforcing the bullish trend.
Whale Activity and Market Structure: A Bullish Outlook
The role of whales in Bitcoin’s recent rally cannot be ignored. Large-scale investors have been accumulating Bitcoin at an accelerated pace, with 11,720 BTC purchased at $93,986—the highest single-day inflow in April. This activity has been accompanied by strong outflows into private wallets, signaling a long-term commitment to the asset. The increased participation of whales has not only bolstered Bitcoin’s price but also shifted its market structure toward a more bullish outlook.
Glassnode’s data provides further evidence of this transformation. The charts reveal a stark contrast between the red streaks of outflows that dominated earlier in the year and the bold green bars of inflows that have emerged in recent weeks. This shift underscores the growing confidence among institutional and retail investors alike, setting the stage for Bitcoin’s next phase of price discovery.
With short-term holders back in profit and whale activity on the rise, the path of least resistance for Bitcoin now points upward. The cryptocurrency is well-positioned to test higher resistance levels, with the potential to break through the $100,000 mark in the near future.
Conclusion: A New Chapter for Crypto and Bitcoin
The Federal Reserve’s decision to retract its anti-crypto guidance marks a turning point for the industry, signaling a more supportive regulatory environment that encourages innovation while maintaining oversight. This shift has been met with enthusiasm from industry leaders and investors, who see it as a green light for greater integration of crypto into traditional finance.
At the same time, Bitcoin’s price recovery reflects a broader resurgence in market confidence. The combination of whale accumulation, short-term holders flipping into profit, and a favorable regulatory backdrop has created a perfect storm for Bitcoin’s continued growth. As the cryptocurrency holds above key resistance levels, the stage is set for further bullish momentum and price discovery.
The road ahead is not without challenges, but the recent developments suggest that Bitcoin and the broader crypto industry are entering a new era of opportunity and acceptance. With institutional support growing and regulatory barriers easing, the future looks brighter than ever for digital assets.
