Fed Ends Special Oversight of Banks’ Crypto Activities, Reverts to Standard Supervision

The Federal Reserve has terminated its 2023 program for monitoring banks' cryptocurrency operations, marking a significant shift in regulatory approach. The specialized oversight required institutions to seek approval before offering services like crypto custody or stablecoin issuance.

Washington's decision reflects growing institutional comfort with digital assets. "We've achieved sufficient understanding of these activities and their risk management," stated the Fed Board, dissolving what began as a temporary measure during fintech's explosive growth phase.

Originally designed as a safeguard against novel risks in tokenization and blockchain finance, the program faced criticism for potentially chilling bank participation in crypto markets. Its discontinuation precedes anticipated guidance from other regulators, suggesting coordinated policy evolution.