The Federal Reserve (Fed) Integrates Crypto Asset Supervision into Standard Procedures, Withdrawing 2023 Guidance amid Regulatory Relaxation.
The Federal Reserve Board announced the termination of its supervision program for banks participating in crypto assets and financial technology activities. This move marks the latest turning point for the central bank in narrowing guidance related to digital assets, reflecting a significant shift in the approach to crypto asset management in the United States.
In the Friday statement, the Fed noted that since launching the program, the agency has "enhanced understanding of those activities". Accordingly, the Board is reintegrating this knowledge and supervision activities into standard oversight procedures, while withdrawing the 2023 supervisory letter that initially established the program.
This decision is set against the backdrop of comprehensive policy changes for crypto assets under the Trump administration. The central bank announced the "Novel Activities Supervision Program" in August 2023, aiming to enhance supervision of banking institutions participating in crypto assets, distributed ledger technology, and other activities. The program also monitored "technology partnerships with non-banking organizations" to provide financial services.
Compared to the Biden administration's period when the program was deployed, the Fed and banking supervisory agencies now have a completely different approach. In April, the Fed announced withdrawing guidance that previously cautioned banks against participating in crypto asset and stablecoin activities, indicating a clear policy shift.
Comprehensive Inter-Agency Coordination Changes
The Fed, along with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Currency Comptroller (OCC), also issued a joint statement last month clarifying how current regulations apply to banks holding crypto assets on behalf of clients. This move creates a clearer legal framework for financial institutions wanting to participate in the digital asset market.
Over the past year, since President Donald Trump took office, regulatory agencies have significantly changed their overall perspective on crypto assets. The FDIC stated it would allow financial institutions to participate in crypto asset activities without prior notification, eliminating previous bureaucratic barriers.
Meanwhile, the U.S. Securities and Exchange Commission (SEC) has launched "Project Crypto" to update digital asset regulations, demonstrating a commitment to building a legal framework aligned with industry development.
