Federal Reserve eases restrictions on crypto banking rules

The Federal Reserve has rescinded two key supervisory guidance letters related to crypto banking activities, a move that signals a shift in the regulatory stance toward digital assets in the United States.

According to the announcement on April 25, the Board withdrew its 2022 guidance requiring state member banks to notify regulators before engaging in crypto-asset activities.

The Fed also revoked a 2023 letter that had outlined a supervisory nonobjection process for dollar token-related operations.

“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 Federal Reserve stated.

“The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate,” it added in a related explanation.

The policy rollback comes after Fed Chair Jerome Powell indicated a more flexible regulatory direction for cryptocurrencies.

It also aligns with similar actions taken by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), both of which recently retracted guidance introduced during the Biden administration.

According to the U.S. Senate Banking Committee Republicans, the move is seen as a step toward improving access to financial services for crypto-related firms.

Senator Tim Scott shared on social media that the reversal was “much needed” and that the withdrawn guidance had “reduced access to financial services for the digital asset industry.”

“It’s great to see the Federal Reserve reversing Biden-era rules that were created as part of Operation Chokepoint 2.0,” stated David Sacks, who has been involved with crypto policy at the White House.

The coordinated policy shifts from multiple federal agencies suggest an emerging consensus on revising the regulatory framework surrounding crypto banking to reflect current risks and practices.