Fed withdraws crypto supervision guidelines, empowering U.S. banks

The Fed has announced the withdrawal of all guidance documents related to digital asset and dollar token activities for banks issued in 2022 and 2023.

According to a press release on April 25, the Federal Reserve (Fed) stated that it has officially canceled two guidance documents issued in 2022 and 2023.

Among them, the 2022 supervisory letter required member banks to notify the Fed in advance if they wanted to participate in activities related to digital assets. The 2023 letter set forth a pre-approval process for banks intending to engage in activities related to dollar tokens. Now, both have been withdrawn.

Instead of continuing to require banks to seek prior permission for each crypto-related activity, the Fed stated it will transition to a supervision model through standard processes similar to those applied to traditional financial activities.

This new approach is expected to reduce the burden of administrative procedures while providing more flexibility for banks to experiment with blockchain, stablecoins, and new applications on Web3. The Fed affirmed:

"These changes are intended to align regulatory expectations with evolving risks, while also fostering innovation in the banking sector."

It can be observed that the Fed is gradually changing its approach instead of maintaining a cautious stance requiring banks to report before engaging in digital asset activities; now, the Fed will switch to normal supervision.