FDIC Lifts Prior Approval Requirement for Banks' Crypto Activities

The Federal Deposit Insurance Corporation (FDIC) has issued new guidance allowing banks under its supervision to engage in cryptocurrency-related activities without seeking prior approval. This policy shift, outlined in the Financial Institution Letter (FIL-7-2025), rescinds the previous FIL-16-2022, which required banks to obtain advance clearance for any crypto activities. Acting FDIC Chairman Travis Hill emphasized that this move marks a departure from the flawed approach of the past three years, aiming to foster a more dynamic and responsive environment for banks to explore and integrate new technologies, including cryptocurrencies.

Hill stated that the FDIC is turning the page on its previous approach, indicating that additional steps will be taken to further clarify banks' engagement with crypto products and services. This announcement aligns with a similar move by the Office of the Comptroller of the Currency, which also cleared the way for banks to enter the crypto sector. The new guidance explicitly states that supervised institutions no longer need to obtain prior approval to conduct crypto business, provided they manage the associated risks by safety and soundness standards.

The FDIC's decision reflects a broader effort to reset its approach to financial innovation. In recent years, several banks pursuing digital asset activities reportedly received informal “pause” letters instructing them to halt engagement with crypto services. These decisions were criticized for lacking transparency and contributing to a perception that the FDIC discouraged innovation through non-public enforcement tactics. Hill has acknowledged that the agency had failed to offer banks clear public guidance, opting instead for ad hoc interventions. He cited over 20 cases where banks had received letters asking them to stop or delay crypto-related activities without formal rulemaking or open comment periods.

Hill emphasized that compliance with the Bank Secrecy Act should not be used as a pretext for denying access to banking services and called for a reevaluation of how the BSA is implemented across financial institutions. Recent internal discussions at the FDIC have reportedly focused on allowing banks to pursue tokenized deposit services and other blockchain-based financial infrastructure without unnecessary regulatory delays. This move brings the FDIC into closer alignment with other regulators, such as the US Securities and Exchange Commission (SEC), which has begun formalizing crypto regulatory frameworks.

The FDIC's decision comes amid growing pressure from industry participants and lawmakers for banking regulators to provide a consistent, transparent roadmap for lawful crypto-related services. The agency’s decision reflects a broader effort to reset its approach to financial innovation. The Executive Director of the Presidential Working Group on Digital Assets Markets, Bo Hines, called the decision “a huge step forward toward innovation and adoption.” The FDIC will continue working with the President’s Working Group on Financial Markets to issue additional guidance and coordinate with other regulatory agencies to replace prior interagency documents on digital assets.