In a landmark shift signaling a more open stance toward digital assets, the U.S. Federal Reserve announced on April 24, 2025, that it is rescinding its prior guidance requiring banks to seek advance approval before engaging in cryptocurrency and stablecoin-related activities. This move, part of a broader regulatory rollback, marks a significant departure from the cautious approach adopted in the wake of high-profile crypto failures in 2022.
šļø What Changed?
The Federal Reserve has withdrawn two key supervisory letters:
1. SR 22-6: Issued in 2022, this letter mandated that state member banks notify the Fed before engaging in any crypto-asset-related activities.
2. SR 23-7: Released in 2023, it outlined a supervisory non-objection process for banks wishing to engage in dollar token activities.
Additionally, the Fed, in coordination with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), has withdrawn two joint statements from January and February 2023. These statements had cautioned banks about the risks associated with crypto-asset activities, including volatility, legal uncertainties, and liquidity concerns.
š” Why It Matters
This policy reversal is part of a broader initiative by the Trump administration to foster innovation in the financial sector. By removing these regulatory hurdles, the administration aims to provide banks with greater flexibility to engage in legally permissible crypto-asset activities, aligning with existing laws and regulations.
The withdrawal of these supervisory letters and joint statements signifies a shift from a precautionary approach to one that encourages responsible innovation. Banks are now expected to manage crypto-asset activities through standard supervisory processes, without the need for prior notification or approval.
š Industry Reactions
The banking and crypto industries have largely welcomed the Fedās decision. Many view it as a step toward normalizing the relationship between traditional financial institutions and the burgeoning crypto sector. The move is expected to encourage banks to explore new opportunities in digital asset services, including custody, trading, and payment solutions.
However, some experts caution that while the regulatory environment is becoming more accommodating, banks must still exercise due diligence. Engaging in crypto-asset activities requires robust risk management frameworks to address potential challenges such as cybersecurity threats, market volatility, and compliance with anti-money laundering (AML) regulations.
š Market Impact
The announcement has had a positive effect on the cryptocurrency market. Bitcoin (BTC) saw a modest increase, trading at approximately $93,262, while Ethereum (ETH) and XRP also experienced slight upticks. Investors interpret the Fedās decision as a signal of growing institutional acceptance of digital assets.
š§ Whatās Next?
The Federal Reserve has indicated that it will continue to monitor banksā crypto-asset activities through its standard supervisory processes. Furthermore, the Fed, FDIC, and OCC are exploring the issuance of additional guidance to provide clarity on permissible crypto-asset activities, ensuring that innovation does not compromise the safety and soundness of the banking system.
This development marks a pivotal moment in the integration of digital assets into the traditional financial system. As regulatory frameworks evolve, banks and other financial institutions will need to stay informed and adapt to the changing landscape to capitalize on emerging opportunities in the crypto space.
For more detailed information, you can refer to the official press release from the Federal Reserve Board: Federal Reserve Board Press Release.
