U.S. Fed, Withdraws Cryptocurrency Regulation Guidelines…Shift to Normal Oversight of Bank Activities

United States Fed Announced Withdrawal Of Regulations Related To Banks' Cryptocurrency Activities (Source: Fed)

The Federal Reserve Board (Fed) has moved to expand industry-wide digital asset accessibility by withdrawing existing regulatory guidelines on banks' cryptocurrency and stablecoin related activities.

In a statement released on the 24th, the Fed announced the official withdrawal of supervisory guidelines introduced in 2022 and 2023, respectively. The guidelines previously specified that member banks that are state-chartered in the U.S. must notify the Fed or obtain separate approval before participating in activities related to cryptocurrencies or stablecoins.

The previous guidelines were established under the assessment that digital assets could pose potential risks to the soundness of the financial system, consumer protection, and systemic stability. However, through this withdrawal, the Fed has stated its intention to integrate these activities into existing general supervisory procedures for management.

The Fed indicated that "this decision aims to foster innovation within the banking system and respond to the changing industry environment," suggesting that cryptocurrency-related activities no longer require separate control. As a result, the regulatory burden on digital assets is effectively eased, and the participation of banks in cryptocurrencies and stablecoins is turning towards incorporation within the institutional framework.

This marks the first major policy change related to cryptocurrencies by the Fed since the inauguration of the Trump administration, aligning with a movement to pursue more favorable policies for digital assets in the United States.

Previously, the Securities and Exchange Commission (SEC) also withdrew in January regulations that required banks and financial companies to account for owned cryptocurrencies as liabilities, a key regulation that had made digital asset custody difficult.

Together with the Fed's recent action, it is becoming clear that U.S. financial regulators are adjusting their policy stance towards managing and accepting the cryptocurrency industry within the institutional framework.