The Federal Reserve joined other bank regulators in formally ending several Biden-era crypto policies on Thursday.
The Federal Reserve Board rescinded two supervisory letters, one from 2022 directing member banks to provide advanced notice of their plans to begin engaging in crypto activities, the other a 2023 policy instructing them to get a supervisory non-objection for dollar tokenization activity.
The Fed, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency also withdrew joint guidance on bank engagement in crypto activity originally published in January and February 2023.
In a statement, the Fed said the moves were made to “ensure the Board’s expectations remain aligned with evolving risks and further support innovation in the banking system.”
The Fed also pledged to work with the other agencies to come up with new guidelines for banks looking to get involved with cryptocurrencies.
The now-withdrawn policies raised several concerns about cryptocurrencies, including their use by scammers, money launderers and other bad actors. They also highlighted the volatility of the assets and the lack of oversight over decentralized systems more broadly.
Regulators advised banks to have sufficient liquidity to deal with runs on cryptocurrencies they might be exposed to. It also sets expectations about risk management and contingency plans.
Many in the banking and crypto industries interpreted these pieces of guidance collectively as a de facto ban on banking crypto, one that left it legally permissible but with a high bar for supervisory compliance.
The withdrawals are the latest sign of bank regulators taking a more favorable position on digital assets.
Last month, the
Leaders of the three agencies have also called for reforms to address the forced closure of bank accounts from crypto companies and individuals with crypto assets — a practice often referred to as “