Federal Reserve Axes Controversial Crypto Oversight Policy

The Fed just ripped up its crypto playbook—and markets are scrambling to read the tea leaves.

Key points:

- The 2020 supervisory letter that choked crypto banking access gets revoked

- Regional banks may now breathe easier when handling digital assets

- Crypto firms gain potential backdoor to traditional finance rails

This abrupt reversal smells like political theater—another case of regulators fighting yesterday’s battles while crypto evolves faster than their rulebooks. The move comes as Bitcoin flirts with new highs, proving once again that decentralized networks outmaneuver bureaucratic gatekeepers every time.

The Federal Reserve Board announced the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities. These actions ensure the Board’s expectations remain aligned with evolving risks and further support innovation in the banking system.

The Board is rescinding its 2022 supervisory letter establishing an expectation that state member banks provide advance notification of planned or current crypto-asset activities. As a result, the Board will no longer expect banks to provide notification and will instead monitor banks’ crypto-asset activities through the normal supervisory process.

The Board is also rescinding its 2023 supervisory letter regarding the supervisory nonobjection process for state member bank engagement in dollar token activities.

Finally, the Board, together with the Federal Deposit Insurance Corporation is joining the Office of the Comptroller of the Currency in withdrawing from two 2023 statements jointly issued by the federal bank regulatory agencies regarding banks’ crypto-asset activities and exposures. The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate.

Source: Federal Reserve