FDIC Lifts Pre-Approval Requirement For Banks Engaging In Crypto Activities

The Federal Deposit Insurance Corporation (FDIC) has issued new guidance allowing banks it supervises to engage in bitcoin and crypto activities without seeking pre-approval. This move reverses a controversial policy that was imposed under the Biden administration, which required banks to obtain clearance from the FDIC before handling bitcoin and crypto assets.

In a statement released on March 28, the FDIC announced that banks can now participate in various crypto-related services, including custody and trading, provided they effectively manage the associated risks. The agency also plans to update and replace outdated regulations with more current crypto guidance.

The policy change was outlined in a new Financial Institution Letter, which rescinds the earlier rules from 2022. These rules had been a source of frustration for the banking industry due to the additional regulatory hurdles they imposed. By removing this barrier, the FDIC is enabling its supervised banks to explore and experiment with the emerging crypto ecosystem more freely. However, specific permissions for these activities will still depend on coordination among various regulatory agencies.

Acting FDIC Chairman Travis Hill described the move as “one of several steps” in establishing a new, more crypto-friendly approach focused on security. He stated, “The FDIC is turning the page on the flawed approach of the past three years.” The agency expects to release additional guidance as it consults with the President’s Working Group on digital assets.

This policy shift comes at a time when major banks have already begun to launch bitcoin and crypto services, despite the previously unclear regulatory landscape. Providing regulatory clarity will likely encourage more banks to enter the crypto space, fostering further innovation and adoption within the industry.