- The Federal Reserve pulled back its 2022 guidance and ceased to require prior notice from state member banks before they undertake proposed crypto activities.
- The Board also withdrew its 2023 supervisory letter, eliminating the nonobjection policy of the state member banks to participate in digital dollar token operations.
- The Fed, the OCC and the FDIC pulled back from two shared 2023 statements to incorporate crypto regulation into the regular supervision procedures of banks.
The Federal Reserve has announced it will no longer require banks to notify the agency before conducting crypto or dollar token activities. These activities will now be monitored under the standard supervision process applied to other banking operations.
Fed Withdraws Previous Notification Requirements
On Thursday, the Federal Reserve Board officially withdrew its 2022 supervisory letter that directed state member banks to provide advance notice before engaging in crypto-asset activities. Under the new approach, these banks are not expected to send prior notifications to the Board regarding planned or current crypto involvement.
Instead, the Board will supervise digital asset-related activities via its existing supervisory channels. This adjustment will seek to balance regulatory expectations against changing risks and foster innovation in the banking business.
In addition, the Board also rescinded its 2023 supervisory letter that had established a supervisory nonobjection process. That guidance applied specifically to state member bank activities involving dollar tokens, which are a form of digital representation of fiat currency.
Federal Reserve Aligns with Other Banking Regulators
The Federal Reserve took this step following decisions made by both the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. Under new guidelines issued by the agencies, banks need no advance approval before offering crypto services.
In coordination with the FDIC, the Federal Reserve is also withdrawing from two 2023 joint statements. These had previously addressed federal regulators’ concerns about banks’ crypto-asset activities and exposures. The withdrawal of these joint documents removes earlier supervisory expectations tied to crypto operations.
The Board has expressed interest in working with other federal agencies to review whether further guidance is needed to support innovation in banking. This includes revisiting digital asset frameworks and updating oversight tools where necessary.
Standard Supervision to Guide Crypto Engagement
The decision marks a transition from special notifications to regular supervisory review for digital asset activities. Crypto and dollar token operations will now fall under the same supervisory processes that apply to traditional banking functions.
This strategy allows banks to venture into new technologies while being under the ambit of regular supervision. It also eliminates supervisory layers that previously necessitated additional steps of regulation for digital engagement, providing a uniform regime of supervision.
