Federal Reserve Ends Special Crypto Oversight Amid ’Debanking’ Debate

The U.S. Federal Reserve has discontinued its specialized oversight program for emerging financial activities, including cryptocurrencies and fintech, reverting to standard supervisory procedures. The decision, announced on August 15, rescinds a 2023 supervisory letter that established enhanced scrutiny for banks engaging with digital assets and stablecoins.

Political pressure from pro-crypto lawmakers played a significant role in the reversal. Critics had labeled the program 'Operation Chokepoint 2.0,' alleging it was part of a broader effort to restrict banking access for politically disfavored industries. The original initiative aimed to tighten oversight of high-risk sectors, including crypto, through informal guidance and supervision.

The Federal Reserve stated it has now strengthened its understanding of crypto-related risks and bank risk management practices, rendering the specialized program unnecessary. This MOVE signals a potential shift in regulatory approach as the debate over 'debanking' digital asset firms continues.