The Fed withdraws its guidance on bank crypto-related activities
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The Fed building, 2024. Photo: Anna Moneymaker/Getty
The Federal Reserve has withdrawn its guidance letter to banks it supervises related to their participation in crypto-related activities, the last of three prudential banking regulators to do so.
Why it matters: President Trump committed on the campaign trail to roll back restrictions on banks seeking to engage in legal activities in the blockchain space, and, with the withdrawal of this letter, that process is complete.
Flashback: As crisis after crisis hit the crypto industry in 2022, the Fed issued guidance on how banks could engage in crypto-related activities, basically telling them to seek permission before opening such lines of business.
- "A supervised banking organization should notify its lead supervisory point of contact at the Federal Reserve prior to engaging in any crypto-asset-related activity," the letter to its supervisees states.
- Then in January 2023, the Fed, Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued a joint letter cautioning banks about crypto-related activities.
- Separately, the OCC and FDIC issued similar letters, each telling supervisees to seek permission before engaging in digital-asset activities.
State of play: The FDIC withdrew its letter in late March, following the OCC, which did so earlier in the month.
- The latest: The Fed officially withdrew its supervisory letter on digital assets Thursday, and in its announcement also noted that it had withdrawn from its joint statement.
What they're saying: "The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate," the Fed's statement Thursday noted.
Between the lines: A case between a representative for Coinbase, the crypto exchange, and the FDIC, suggested that supervised banks didn't seem to ever get permission to engage in crypto-related business lines.
- These issues came to a head when Fed chair Jerome Powell appeared before the Senate Banking Committee, where he promised to review the matter.
The bottom line: There's been debate over the extent to which there was a coordinated effort to deny banking services to legal crypto firms, but, either way, the last vestiges of the former administration's digital asset policy toward banks has now been rescinded.
