Federal Reserve Softens Crypto Restrictions For U.S. Banking System
The Federal Reserve Board revised its expectations for banks' interactions with crypto assets and stablecoins, removing guidelines about these activities.
Quick overview
- The Federal Reserve Board has revised its expectations for banks' interactions with crypto assets and stablecoins, removing previous guidelines.
- This change aims to foster innovation in the financial sector while aligning regulatory approaches with evolving risks.
- State member banks are no longer required to notify customers about cryptocurrency activities, as the Fed revokes earlier supervisory letters.
- The Fed will work with relevant agencies to determine if new guidelines are needed to support innovation in crypto-related activities.
The Federal Reserve Board revised its expectations for banks’ interactions with crypto assets and stablecoins, removing guidelines about these activities.
This action aims to further encourage innovation in the financial sector and ensure the regulatory approach aligns with changing risks.
As part of this change, the Board is revoking its supervisory letter from 2022. State member banks must notify customers of any planned or ongoing activity involving cryptocurrency assets. Under the new regulations, banks will no longer be required to provide these communications.
Some prominent industry members alleged that their affiliation with the digital asset sector was the sole reason they and their companies couldn’t access traditional banking services before these regulations.
The Fed is also revoking a similar order from 2023 regarding the non-objection procedure for state member banks involved in stablecoin operations.
Pre-clearance is no longer required for oversight, subject to regular regulatory scrutiny.
Furthermore, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) are withdrawing two joint statements released by federal bank regulatory agencies in 2023. These messages provided the first guidelines for banks operating in those markets and included the authorities’ opinions on the risks connected to exposures to crypto.
The Fed will now collaborate with the relevant agencies to assess whether new or revised guidelines are required to encourage innovation in crypto-related endeavors.
Only a few weeks have passed since the Office of the Comptroller of the Currency (OCC) reversed its stance. Additionally, the federal banking authority lifted limitations that had restricted financial institutions’ access to cryptocurrency assets.
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