Federal Reserve Withdraws Restrictive Crypto Guidance, Easing Bank Engagement

Washington D.C. – The Federal Reserve Board, in a significant policy shift, has withdrawn key supervisory guidance that previously imposed stringent notification and approval requirements on banks engaging in crypto-asset and dollar token activities. This move, announced in April 2025, aligns the central bank with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), both of which had already rescinded similar directives earlier in the year. The decision signals a more permissive regulatory environment for traditional financial institutions exploring digital assets.

The withdrawn guidance includes the Fed's 2022 supervisory letter, which required state member banks to provide advance notification of planned or current crypto-asset activities, and its 2023 letter concerning the supervisory non-objection process for dollar token activities. Additionally, the Fed joined the OCC and FDIC in withdrawing from two 2023 interagency statements that had cautioned banks about crypto-related risks. This collective action aims to integrate crypto activities into the standard supervisory process, treating them akin to other banking services.

Industry observers and market participants have reacted to the development, with one social media user, "奶奶 capital," stating in a tweet that "the fed came out and FSHed a bunch of crypto DATs." This sentiment reflects the perception of a decisive, albeit informally described, action by the Federal Reserve concerning digital assets. The move effectively removes prior compliance hurdles, fostering an environment where banks can engage with cryptocurrencies and stablecoins without seeking explicit prior permission from regulators.

Following these withdrawals, the federal bank regulatory agencies, including the Fed, issued a joint statement in July 2025 emphasizing risk-management considerations for crypto-asset safekeeping. This guidance clarifies how existing laws and risk management principles apply to banks holding crypto-assets on behalf of customers, without introducing new supervisory expectations. It underscores the continued importance of robust risk management, cybersecurity, and compliance with anti-money laundering (AML) and Bank Secrecy Act (BSA) regulations.

The regulatory shift is expected to reduce uncertainty that previously deterred banks from deeper engagement with digital assets, potentially spurring innovation within the sector. Regulators have indicated they will continue to explore additional guidance to support innovation while ensuring the safety and soundness of the financial system. This evolving landscape suggests a future where crypto-asset activities are more seamlessly integrated into the broader banking framework.