Federal Reserve Rolls Back Crypto Guidance for Banks
On April 24, 2025, the U.S. Federal Reserve announced the withdrawal of its 2022 and 2023 supervisory letters that had previously required state member banks to notify regulators in advance of any planned or ongoing activities involving cryptocurrencies and stablecoins.
”The Board is rescinding its 2022 supervisory letter establishing an expectation that state member banks provide advance notification of planned or current crypto-asset activities,” the Board of Governors of the Federal Reserve explained in an April 24 statement.
This move aligns the Fed with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), which had already rescinded similar guidance earlier in the year.
The original guidance was issued amid concerns over the volatility, legal uncertainties, and liquidity risks associated with digital assets. It also highlighted potential threats to financial stability and the use of cryptocurrencies in illicit activities such as money laundering and terrorism financing.
”Certain types of crypto-assets, such as stablecoins, if adopted at large scale, could also pose risks to financial stability including potentially through destabilizing runs and disruptions in the payment systems.”
Fed Retracts Warning to Banks on Crypto Fraud Risks
Fed has also retracted two statements from 2023 that cautioned banks about potential fraud among crypto industry participants.
These agencies had previously warned banks that crypto firms could engage in inaccurate or misleading disclosures, potentially leading to unfair, deceptive, or harmful practices affecting both retail and institutional investors. Those warnings have now been withdrawn.
”Inaccurate or misleading representations and disclosures by crypto-asset companies […] may be unfair, deceptive, or abusive, contributing to significant harm to retail and institutional investors,” the agencies added in the now-withdrawn joint statement.
With the withdrawal of these supervisory letters, the Federal Reserve indicated that it would now oversee crypto-related activities through its standard supervisory processes. This policy shift reflects the Trump administration’s broader initiative to foster a more crypto-friendly regulatory environment and support innovation within the financial sector.
The decision has been welcomed by proponents of digital assets, who view it as a step toward integrating cryptocurrencies into the traditional banking system. However, it also raises questions about the balance between encouraging financial innovation and ensuring adequate oversight to protect consumers and maintain financial stability.
