Fed Ends 2023 Crypto Oversight Program Integrating Supervision Into Routine Process

The U.S. Federal Reserve has officially ended its 2023 "Novel Activities Supervision Program," a specialized initiative designed to monitor banks’ engagement with crypto assets and fintech activities. The decision, announced on August 15, 2025, marks a return to the Fed’s traditional regulatory model, where oversight of innovative financial activities is integrated into standard banking supervision rather than handled through a dedicated program [1]. The move follows a directive from the Trump administration, which has advocated for regulatory clarity and a more accommodating stance toward the crypto industry [5].

The program was initially introduced to address emerging risks associated with digital assets and distributed ledger technology. It required state member banks to provide advance notice of any planned or ongoing crypto-related activities. Under the new approach, this requirement has been rescinded. The Federal Reserve will now monitor banks’ crypto-asset activities through its normal supervisory processes rather than through dedicated reporting and review channels [2]. This shift aims to streamline oversight and reduce regulatory complexity, particularly for institutions operating at the intersection of traditional finance and digital assets.

The decision has been interpreted in multiple ways by analysts. Some view it as an indication that the Fed has gained sufficient experience and understanding of crypto-related risks to manage them within its existing framework. Others see it as a broader signal of a policy shift toward a less interventionist stance on digital assets, particularly under the current administration [4]. The Federal Reserve has emphasized, however, that the move does not represent a reduction in oversight. Banks will continue to be monitored for their crypto-related activities, including deposits, payments, and lending, through standard regulatory channels [3].

The termination of the program is expected to have several practical implications. U.S. banks may face fewer compliance hurdles, potentially increasing their willingness to engage with the crypto industry. This could lead to enhanced liquidity and greater bank involvement in digital assets, benefiting major cryptocurrencies and stablecoins. Additionally, it may encourage more robust adoption of tokenized deposits and decentralized finance (DeFi) platforms [7]. The Fed’s decision could also influence the broader regulatory landscape, particularly as other agencies, such as the Securities and Exchange Commission, have also shown signs of adopting a more flexible approach to crypto regulation [5].

The timing of the decision has drawn additional attention. It comes amid broader political scrutiny of the Federal Reserve, particularly in the wake of recent personnel changes and the impending end of Jerome Powell’s term as Fed Chair. The resignation of Fed Governor Adriana Kugler in late July and the nomination of Stephen Miran to fill the vacancy have raised questions about the central bank’s independence and the potential influence of political priorities on monetary policy [6]. The decision to sunset the program occurs just months before Powell’s term concludes, fueling speculation about the direction of future regulatory strategies.

The Federal Reserve has stated that the knowledge and experience gained from the program will enhance its general supervisory capabilities, making the specialized initiative unnecessary moving forward. However, the decision also raises questions about how the agency will continue to respond to the rapid innovations in the digital asset sector [7]. While the Fed has expressed confidence in its ability to manage crypto-related risks within its broader regulatory framework, the long-term success of this approach will depend on its effectiveness in adapting to the evolving landscape of financial technology [8].

Overall, the Federal Reserve’s move to integrate crypto oversight into standard regulatory processes represents a strategic shift in its approach to emerging financial technologies. While it signals a more streamlined regulatory environment for banks, it also highlights the need for continued vigilance in monitoring and managing the risks associated with digital assets. The implications of this decision will likely unfold over time, as both regulators and the market adjust to the new supervisory landscape [1].

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[1] Federal Reserve Board. (2025, August 15). Federal Reserve Board Press Release. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250815a.htm

[2] CoinDesk. (2025, August 15). U.S. Fed Officially Scraps Specialist Group Meant to Oversee Crypto Issues. https://www.coindesk.com/policy/2025/08/15/u-s-fed-officially-scraps-specialist-group-meant-to-oversee-crypto-issues

[3] AInvest. (2025, August 15). Fed Ends Crypto Supervision Program, Integrates Oversight Into Routine Process. https://www.ainvest.com/news/fed-ends-crypto-supervision-program-integrates-oversight-routine-process-2508/

[4] Morningstar. (2025, August 15). Fed Ends Special Program to Supervise Innovative Financial Activities. https://www.morningstar.com/news/dow-jones/202508155227/fed-ends-special-program-to-supervise-innovative-financial-activities

[5] Cointelegraph. (2025, August 13). Federal Reserve Sunset Monitoring Banks’ Crypto Activities. https://cointelegraph.com/news/federal-reserve-sunset-monitoring-banks-crypto

[6] Bankless. (2025, August 12). Federal Reserve Ends "Novel Activities" Supervision Program. https://www.bankless.com/read/federal-reserve-ends-novel-activities-supervision-program

[7] American Banker. (2025, August 14). Fed to Sunset Program Overseeing Banks’ Use of Emerging Tech. https://www.americanbanker.com/news/fed-to-sunset-program-overseeing-banks-use-of-emerging-tech

[8] CryptoDnes.bg. (2025, August 12). Fed to End Special Oversight of Crypto and Fintech Bank Activities. https://cryptodnes.bg/en/federal-reserve-to-end-special-oversight-of-crypto-and-fintech-bank-activities/