The Federal Reserve's withdrawal of special regulatory requirements for banks' crypto activities marks a significant shift in the U.S. regulatory stance towards the cryptocurrency industry. This plan originated during the banking crisis in 2023, when three banks involved in cryptocurrency business, such as Silicon Valley Bank and Silvergate Bank, successively collapsed, prompting the Federal Reserve to strengthen risk monitoring of innovative financial technologies, including crypto custody, stablecoin issuance, and blockchain technology application.
Previously, banks needed prior approval before launching new crypto businesses, which was cumbersome. This experienced a process of deregulation, with the Federal Reserve first withdrawing the requirement for prior approval for crypto businesses in April. In July, it collaborated with OCC and FDIC to issue guidelines for crypto custody services, ultimately completely terminating the special program on August 15.
Here is an introduction to OCC and FDIC:
OCC (Office of the Comptroller of the Currency): Part of the U.S. Department of the Treasury, established in 1863, primarily responsible for regulating national banks and federal savings institutions. Its core responsibilities include issuing bank charters, formulating regulatory policies, and reviewing bank operational compliance.
FDIC (Federal Deposit Insurance Corporation): An independent federal agency established in 1933 to address the wave of bank failures during the Great Depression. Its main functions include deposit insurance, regulating bank risks, and taking over failed banks.
This withdrawal simplifies the regulatory process, eliminates special reviews, allows banks to operate without separately reporting crypto or fintech businesses, and enables them to make independent decisions based on existing risk management frameworks. Moreover, the assessment of 'reputational risk' has been replaced with specific financial risk indicators, reducing banks' concerns about serving crypto enterprises and allowing them to outsource crypto custody services.
Affected by this news, Chinese concept blockchain stocks surged over 17% in one day. In the future, banks can more freely conduct crypto custody, stablecoin, and other businesses, accelerating the integration of traditional finance with the crypto ecosystem!