Federal Reserve Officially Scraps 2023 Bank Crypto Restrictions—For Good
The Fed just tore up its own rulebook. After two years of regulatory limbo, U.S. banks can finally engage with crypto—no asterisks, no sunset clauses.
What Changed?
Gone are the 2023-era prohibitions that forced banks to treat digital assets like radioactive material. The central bank’s updated guidance removes capital constraints, custody hurdles, and trading barriers that kept traditional finance on the sidelines. One senior regulator called the reversal "a necessary evolution"—though cynics might note it arrived just as Wall Street finished building its own blockchain infrastructure anyway.
Why This Matters
This isn’t a trial run or a pilot program. The Fed’s permanent pivot signals institutional validation at the highest level, effectively green-lighting everything from Bitcoin-backed loans to tokenized Treasury holdings. Expect major banks to announce crypto divisions within weeks—they’ve been waiting in the wings with ready-to-launch products since the restrictions first dropped.
The new rules don’t create a free-for-all. Banks still need robust risk frameworks and anti-money laundering protocols. But the message is clear: digital assets are now part of the financial mainstream, not a fringe experiment. The era of regulatory ambiguity is over.
One veteran trader put it bluntly: "They spent two years building a fence, then realized the money was already on the other side."
Fed changes federal access for crypto companies in America
“New technologies offer efficiencies to banks and improved products and services to bank customers,” Vice Chair for Supervision Michelle Bowman said.
“By creating a pathway for responsible, innovative products and services, the Board is helping ensure that the banking sector remains SAFE and sound while also modern, efficient, and effective.”
The 2023 policy forced state member banks to follow the same activity rules that other federal regulators used. It also tried to lay out how banks should handle new tools. After it came out, the Board said the financial system shifted and its own understanding grew, so it cleared the rule and replaced it.
The new policy lets banks under the Fed take part in certain innovative activities, which matters for firms like Circle, Paxos, Tether, and BitGo. These companies will now place customer reserves directly at the Fed instead of routing everything through commercial banks. That lowers costs and cuts counterparty risk while giving them more control over flows.
Some companies tried other ways to reach the Fed’s payment system.The big one was specialty banking charters.
One example is Wyoming’s Special Purpose Depository Institution setup, built for crypto companies. Custodia Bank, one of the first to use it, sued the Federal Reserve Board and the Kansas City Fed for what it called “a patently unlawful delay.” A court dismissed the case, and Custodia appealed. That case is still active.
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