Federal Reserve Shuts Down Crypto Oversight Program, Easing Scrutiny on Banks

The Federal Reserve has discontinued its Novel Activities Supervision Program, a dedicated initiative monitoring banks' engagement with cryptocurrencies and blockchain technologies. Launched in 2023, the program tracked crypto custody, lending, and tech partnerships. The central bank now reverts to conventional supervisory methods, citing improved understanding of crypto risks and bank risk management practices.

US banks gain flexibility to offer crypto services, including dollar-backed stablecoins, without prior approvals. This shift signals a maturation of regulatory frameworks and may accelerate institutional participation in digital assets. Market observers anticipate broader adoption of blockchain-based financial products as oversight becomes standardized.