The US Federal Reserve has ended its program that closely watched banks' crypto activities, marking a significant shift in regulatory posture. This decision follows President Trump's executive order to end unfair banking practices based on sentimental grounds, such as politics or ideology.
What does this mean for banks and crypto companies?
Less scrutiny: Banks no longer need to provide advance notice of planned or ongoing crypto-asset activities.
Normal supervisory process: The Fed will monitor crypto activities through its standard supervisory process, rather than heightened scrutiny.
Increased flexibility: Banks can now engage in crypto-related activities without prior approval, although they remain subject to general oversight and risk management requirements.
*Impact on the crypto industry*
Positive signal: The crypto industry welcomes this change, seeing it as a sign of a more open and less restrictive regulatory environment.
Growing adoption: This shift may lead to increased adoption of digital assets in traditional finance, as banks and financial institutions explore crypto services.
Regulatory clarity: The Fed's decision brings clarity and consistency to crypto regulations, aligning with other banking regulators like the FDIC and OCC.
