U.S. Fed Lifts Official Guidance That Blocked Banks from Crypto Activities
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On December 17, the U.S. Federal Reserve withdrew its 2023 guidance for state member banks on digital assets.
A new framework has been introduced to encourage responsible innovation. Bank safety and financial stability remain priorities.
Banks are no longer required to treat crypto activities as automatically high-risk.
https://twitter.com/federalreserve/status/2001397388649373857?s=20
Both insured and uninsured state member banks can now engage with digital assets through standard processes. This is permitted if existing risk management rules are followed.
Crypto Risks “Evolved,” Says Fed in Major Supervision Overhaul
The policy shift reverses guidance introduced after the 2022 collapse of FTX, which had effectively limited banks’ ability to serve crypto firms and, in some cases, blocked access to Federal Reserve membership and master accounts.
Fed officials say their view of crypto risks has evolved and that the old rules are no longer appropriate given changes in technology, markets, and oversight practices.
As part of the move, the Federal Reserve also scrapped two supervisory letters focused on crypto and shut down its Novel Activities Supervision Program, folding oversight of digital assets back into standard bank supervision.
Vice Chair for Supervision Michelle Bowman said new technologies can improve efficiency and expand services for customers, as long as risks are managed properly.
The decision drew strong reactions from the crypto industry.
Custodia Bank CEO Caitlin Long called the 2023 policy “Operation Chokepoint 2.0” and said it was used to deny her bank a Fed master account.
https://twitter.com/CaitlinLong_/status/2001404175721378197?s=20
Custodia is still pursuing an en banc rehearing after losing a previous appeal over that denial. Wyoming Senator Cynthia Lummis also welcomed the change, framing it as a win for state-level financial innovation.
Despite the positive reaction from parts of the industry, the decision was not unanimous.
Fed Governor Michael Barr disagreed with the change.
He expressed concern that it might lead to “regulatory arbitrage.” This means banks could seek out the easiest rules, creating an uneven field and potential risk.
Global Movement Toward Clearer Crypto Rules
This shift in the U.S. is part of a broader trend. Other major markets are also working to define their crypto regulations.
In the U.S., the Office of the Comptroller of the Currency (OCC) has signaled support. It is creating a clearer path for crypto firms to become nationally chartered banks if standards are met.
Other major markets that once appeared more cautious are now moving in the same direction as they push for stronger oversight and clearer rules.
In Australia, the securities regulator introduced new exemptions that lower licensing and custody requirements for stablecoins and wrapped tokens.
The reforms, delivered through Instruments 2025/867 and 2025/871, streamline how intermediaries distribute and hold digital assets while maintaining compliance controls.
Additionally, the U.K. is also preparing for its shift. HM Treasury is drafting legislation that will place crypto assets under the Financial Conduct Authority’s supervision by 2027, treating them like regulated financial products as adoption rises across the country.
