Fed Reverses Crypto Banking Restrictions Amid Custodia’s Legal Challenge
The Federal Reserve has rescinded its 2023 policy that barred banks from engaging with crypto assets, marking a significant shift in regulatory posture. This reversal comes as Wyoming-chartered Custodia Bank appeals the denial of its master account application—a decision originally rooted in the now-withdrawn guidance.
Vice Chair for Supervision Michelle Bowman framed the MOVE as balancing innovation with safety: "New technologies offer efficiencies to banks and improved products to customers." The policy change follows growing recognition that the original restrictions had become outdated amid evolving financial systems.
Custodia's December 15 petition to the Tenth Circuit Court seeks en banc review, escalating a years-long battle against what it alleges were systematic debanking practices targeting crypto firms between 2020-2023. The case now tests the Fed's revised stance on digital asset integration.
