Main Points:
- Federal Reserve rescinds 2022 and 2023 supervisory letters on crypto and stablecoin activities
- U.S. banking regulators—including the FDIC and OCC—follow suit, removing advance-notice requirements
- Policy change reflects broader administration goal to foster financial innovation
- Banks will now engage in crypto under standard supervisory procedures
- Industry response highlights both optimism for growth and concerns over risk management
Background: From Caution to Consistency
In response to mounting concerns over volatility and legal uncertainty in the crypto sector, the Federal Reserve in May 2022 issued Supervisory Letter SR 22-6, mandating that state-member banks provide advance notification before undertaking any cryptocurrency-related activities. A year later, in August 2023, the Fed expanded oversight with SR Letter 23-8, requiring supervisory non-objection for stablecoin engagements under Interpretive Letter 1174.
These measures were part of a trio of cautious directives from the Fed, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC). Coming on the heels of the FTX collapse, the joint 2023 statement emphasized potential liquidity, compliance, and fraud risks associated with digital assets.
However, mounting calls for regulatory clarity and innovation prompted a re-evaluation. On April 24, 2025, the Fed officially withdrew both its 2022 and 2023 supervisory letters, stating that cryptocurrency and stablecoin activities by state banks would now fall under its standard supervisory processes rather than specialized guidance.
Regulatory Rollback: What Was Rescinded?
- 2022 Supervisory Letter (SR 22-6)
- Required banks to notify the Fed and, for state-member banks, their state chartering authority prior to any crypto-asset engagement.
- 2023 Supervisory Letter (SR 23-8)
- Established a non-objection process for stablecoin issuance, holding, and transactions under DLT frameworks.
- FDIC and OCC Statements
- The FDIC and OCC concurrently rescinded their 2023 cautionary statements on crypto risk and liquidity.
- The OCC’s Interpretive Letter 1183 takes effect, reaffirming permissible crypto custody and blockchain node participation without requiring written non-objection.
Implications for Banks and Innovation
Streamlined Oversight
By treating crypto and stablecoins like any other banking product, regulators aim to eliminate procedural delays. Banks no longer need to file specialized notices or wait for written non-objections, allowing for faster deployment of blockchain-based services. This is expected to:
- Accelerate partnerships with crypto firms
- Enable quicker rollout of tokenized products
- Reduce compliance overhead
Risk Management Remains Paramount
Despite the rollback, regulators stress that banks must maintain robust risk frameworks:
“Banks are still expected to have strong risk management controls in place to support novel activities, just as they do for traditional ones.”
— Acting Comptroller Rodney E. Hood
Key risk areas include operational resilience, liquidity buffers, and anti-money laundering (AML) protocols. The Novel Activities Supervision Program will continue to monitor developments, ensuring that consumer protection and systemic stability are not compromised.
Industry Response: Optimism and Caution
Positive Outlook
- Crypto Exchanges & FinTechs
Welcome the move as a sign that traditional banks can now integrate blockchain services more easily, potentially increasing liquidity and mainstream adoption. - Blockchain Innovators
See an opportunity for co-development of tokenized assets, smart-contract platforms, and custody solutions within established banking infrastructure.
Areas of Concern
- Regulatory Arbitrage
Without clear new rules, some fear banks might exploit ambiguities, leading to uneven enforcement and potential consumer risks. - Market Volatility
Rapid bank entry into crypto markets could exacerbate price swings if not carefully managed, particularly in stablecoin liquidity pools. - Compliance Costs
While advance-notice requirements are gone, banks may still face substantial due diligence expenses to meet existing AML and Consumer Financial Protection Bureau (CFPB) standards.
Comparative View: Global Trends
The U.S. shift aligns with movements in other jurisdictions:
- European Union
Under the MiCA framework, banks will follow a unified licensure model but face detailed capital and transparency requirements before engaging in crypto-asset services. - Singapore
The Monetary Authority of Singapore has signaled openness to “regulatory sandboxes,” allowing banks and fintechs to trial crypto products under supervisory watch. - Japan
The Financial Services Agency continues to require pre-approval for stablecoin issuance, highlighting a more cautious stance relative to the U.S.
These comparisons suggest that while the U.S. embraces a technology-neutral posture, other major markets maintain more prescriptive approaches to digital assets.
A New Chapter for Bank-Crypto Collaboration
By rescinding its specialized crypto and stablecoin guidance, the Federal Reserve has removed significant administrative hurdles, marking a decisive shift toward fostering financial innovation. Banks can now deploy blockchain services under standard oversight, promising faster integration and potential market growth. However, the emphasis on robust risk management and continued monitoring underscores that safety and soundness remain critical. As the landscape evolves, the collaboration between traditional finance and crypto innovators is poised to deepen—reshaping payments, asset custody, and investment products in the years ahead.
