Federal Reserve Concludes Landmark Crypto Oversight Program for Banks – What’s Next?
The Fed pulls the plug on its crypto babysitting gig for banks—just as things were getting interesting.
After years of wrestling with how to regulate banks dabbling in digital assets, the Federal Reserve quietly shelved its supervisory program this week. No fanfare, no press conference—just a bureaucratic mic drop.
The end of an era (or a paperwork exercise?)
Insiders say the move reflects both progress and paralysis: Banks now have clearer guidelines, but the Fed’s still playing catch-up with DeFi’s breakneck evolution. Meanwhile, Wall Street’s crypto-curious institutions are left reading tea leaves—and compliance manuals.
The real question?
Whether this ‘conclusion’ actually clears the path for innovation—or just kicks the can to the next administration. Bonus cynicism: At least banks can now lose money on crypto with fewer reporting requirements.
Fed ends supervision of crypto activities in banks
The Federal Reserve Board announced in a statement on Friday that it has ended its program that monitors banks engaged in crypto activities.
The Board said it will return to the "normal supervisory process" used to monitor these activities.
"The Federal Reserve Board on Friday announced that it will sunset its novel activities supervision program and return to monitoring banks' novel activities through the normal supervisory process," the statement said.
The Fed claims the program helped it gain a better understanding of those sectors and how they apply in banking, including risk management practices, since its launch..The knowledge acquired will be integrated into its "standard supervisory process." It also mentioned that it withdrew a supervisory letter that gave birth to the program, known as the Novel Activities Supervision Program, in 2023.
The initiative was launched to enhance the agency's oversight of banks' activities related to crypto.
The Board stated at the time that the program WOULD help manage risks to safeguard the banking system.
In April, the Fed ended its guidance on crypto and stablecoin activities for banks and updated its expectations for how those activities should be conducted.
The agency also joined the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) to issue a statement in July, clarifying that banks could offer safekeeping and custody services for customers' crypto assets.
The MOVE comes as more government agencies have adopted a flexible stance towards crypto under President Donald Trump's administration.
Other agencies, such as the Securities & Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are also seeking regulatory measures for the crypto industry.
