Fed Overhauls Bank Policy, Pulls Back From Prior Crypto-Focused Restrictions
The Federal Reserve has reversed a nearly three-year policy restricting state member banks from participating in crypto-related activities, introducing a new framework aimed at supporting innovation while maintaining financial stability and safety. This shift aligns with broader deregulatory changes, including the withdrawal of crypto-restrictive guidance and cessation of the Fed's Novel Activities Supervision Program. The central bank now sees earlier guidance as outdated, acknowledging better understanding of crypto sector risks. Industry figures, such as Custodia Bank’s Caitlin Long and Wyoming Senator Cynthia Lummis, welcomed the change as a victory for state-level financial innovation and digital assets. The policy update is expected to reduce barriers for banks serving crypto firms and could foster broader institutional adoption in the U.S. Experts note, however, that effective implementation is crucial, as certain crypto products may not easily integrate with traditional banking frameworks and uncertainties remain over execution.
