Federal Reserve Scales Back Pre-Approval Crypto Requirements for Banks

The Federal Reserve has scrapped its earlier directive mandating that banks report their cryptocurrency dealings in advance.

Under the new structure, digital asset operations will be folded into the Fed’s routine supervisory procedures. This shift marks a deliberate recalibration—one designed to preserve regulatory vigilance, while allowing technological progress in banking to unfold without unnecessary procedural friction.

Along with the FDIC and OCC, the Federal Reserve has pulled out of two 2023 joint statements that warned about shady dealings by some crypto firms. The regulators now say they’ll rethink how they approach crypto guidance—and want to give banks more space to explore new tech initiatives without excessive red tape.

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Back in March 2022, the Fed laid down the rules: any bank working with cryptocurrencies needed to alert regulators. Not long after came another directive—this time focused on stablecoins.

The rationale? Regulators flagged mounting concerns about payment infrastructure risk, consumer harm, and the broader threat to financial stability—as well as fears over illicit finance, from money laundering to terrorist funding. 

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,

that document reads.

Not long ago, the SEC scrapped a rule that made financial companies treat crypto as a liability on their balance sheets.

That change made it easier for banks to deal with digital assets—and showed that U.S. regulators are starting to adjust their rules to fit the pace of today’s market.

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While the rescinding of the Fed’s prior guidance offers banks more flexibility, it does not eliminate oversight. The Federal Reserve stated that supervisory expectations will continue to adapt alongside evolving risk profiles, and surveillance will remain ongoing.

This policy shift signals an institutional openness to supporting crypto-related innovation within the traditional banking framework—a position that drew commentary from Michael Saylor.

In the coming months, the Federal Reserve, joined by the FDIC and OCC, will convene with financial market participants to explore whether further methodological support is warranted for banks engaging with emerging technologies.

The initiative reflects a growing awareness: that the future of finance demands a regulatory ethos both resilient enough to safeguard the public and agile enough to foster meaningful innovation.