BREAKING: The Federal Reserve withdraws crypto guidance for banks.

Federal Reserve Rescinds Crypto Guidance, Easing Path for Banks

In a significant policy shift, the Federal Reserve has formally withdrawn previous guidance issued in 2022 and 2023 that had required U.S. banks to seek approval or provide prior notice before engaging in activities related to cryptocurrencies and stablecoins.

This move represents a notable regulatory softening in the United States' approach to digital assets and may signal a new era of openness towards banking institutions participating in the evolving world of crypto finance.

Policy Reversal Signals Regulatory Easing

The rescinded guidance, which had been viewed by many in the industry as restrictive, initially required banks under Federal Reserve supervision to obtain explicit approval before engaging in any crypto-asset or stablecoin-related activity. It was originally introduced as a precautionary response to the rapid growth of digital assets and concerns surrounding consumer protection, financial stability, and potential risks related to money laundering and fraud.

However, in a statement released this week, the Federal Reserve noted that these earlier supervisory letters—SR 22-6 and SR 23-7—are no longer necessary due to evolving market conditions and the central bank’s updated approach to innovation oversight.

“The Federal Reserve remains committed to a balanced regulatory framework that encourages responsible innovation,” the statement said. “We are confident that existing risk management expectations, along with standard supervisory procedures, are sufficient to address the current level of activity in digital asset markets.”

Impact on U.S. Banks and the Crypto Industry

The immediate effect of the policy reversal is to remove an administrative barrier for banks seeking to explore blockchain-based financial products or partner with fintech firms offering crypto services. Analysts suggest this could result in increased institutional participation in the crypto space, particularly in areas such as custody services, payment processing, tokenization of assets, and issuance of stablecoins.

Under the previous rules, banks were often forced to navigate a complicated process of notifications, risk assessments, and waiting periods before launching or even testing crypto-related services. Industry leaders argued that the guidance placed U.S. banks at a competitive disadvantage compared to their international peers, particularly in jurisdictions where regulatory frameworks had already embraced digital asset integration.

“The removal of these constraints opens the door for innovation and competition,” said Karen Millstone, a financial policy analyst at the American Blockchain Institute. “We could see more banks launching digital asset custody services, facilitating crypto payments, and exploring real-world use cases for blockchain technology.”

A Changing Regulatory Climate

The withdrawal comes amid broader reevaluations of crypto policy by various U.S. agencies. Earlier this year, the Securities and Exchange Commission (SEC) clarified its stance on the classification of certain digital tokens, while the Commodity Futures Trading Commission (CFTC) has expanded its oversight of crypto derivatives markets.

At the same time, bipartisan discussions in Congress have advanced proposals for a comprehensive digital asset regulatory framework that would unify oversight responsibilities, reduce legal uncertainty, and provide clearer guidelines for both traditional financial institutions and Web3 innovators.

Some experts believe the Federal Reserve's latest decision reflects an understanding that overly stringent rules may be counterproductive in a rapidly developing sector. Instead of imposing blanket restrictions, the central bank now appears to be placing greater emphasis on existing risk-based supervisory processes that apply across all banking activities.

Stablecoins in Focus

While the rollback affects crypto broadly, it also has significant implications for stablecoins—digital tokens typically pegged to fiat currencies like the U.S. dollar. Several major U.S. banks had previously expressed interest in issuing their own stablecoins or partnering with third-party issuers, but the regulatory uncertainty had largely stalled such initiatives.

With the 2022 and 2023 guidance now rescinded, banks may be more willing to re-examine stablecoin projects as viable tools for real-time settlement, cross-border payments, and decentralized finance applications. However, observers caution that banks will still need to maintain robust risk management frameworks and adhere to anti-money laundering (AML) and know-your-customer (KYC) requirements.

“The guidance withdrawal doesn’t mean a free-for-all,” said Joseph Adler, a former regulator turned consultant. “It simply means that banks no longer need a special permission slip to explore the space. The usual standards of due diligence and regulatory compliance still apply.”

Industry Response

The crypto and financial communities have welcomed the Federal Reserve's announcement, with several major banking associations issuing statements of support. The move is expected to bolster confidence in the U.S. financial system's ability to adapt to technological changes without compromising security or consumer protection.

J.P. Morgan, which already operates its own blockchain-based payment platform, Onyx, noted that the shift “aligns with the global trend toward digital asset adoption in regulated environments.” Smaller regional banks, many of which had paused their digital asset initiatives pending regulatory clarity, are also expected to re-engage with the sector.

A Turning Point for Digital Finance?

The Federal Reserve’s decision to rescind its previous crypto guidance may ultimately serve as a pivotal moment for digital finance in the United States. As traditional institutions gain greater freedom to engage with blockchain technology and crypto markets, the boundary between conventional banking and digital assets continues to blur.

While the path forward remains complex, this regulatory pivot suggests a growing recognition of crypto’s long-term role within the broader financial system. By lowering procedural hurdles while maintaining a focus on risk management, the Federal Reserve appears to be charting a more balanced and innovation-friendly course for the future.

🇺🇸 BREAKING: The Federal Reserve withdraws crypto guidance for banks.

The Federal Reserve just rescinded its 2022 and 2023 guidance that required banks to notify or get approval before engaging in crypto or stablecoin activities. pic.twitter.com/Jed7hpCVNy

— Cointelegraph (@Cointelegraph) April 24, 2025

Whether this move accelerates mainstream crypto adoption or simply encourages more thoughtful experimentation remains to be seen. But for now, the message is clear: U.S. banks are officially back in the game.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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