Fed Ends Crypto Supervision Program, Integrates Oversight Into Routine Process

The U.S. Federal Reserve announced on August 15, 2025, that it will discontinue its “Novel Activities Supervision Program,” a temporary initiative launched in August 2023 to oversee banks’ engagement with cryptocurrencies and distributed ledger technology [1]. Initially designed as a risk-focused framework for monitoring banks that provided financial services to crypto firms and fintechs, the program is now being folded into the Fed’s standard supervisory process [2].

The Fed stated that over the course of the program, it had developed a stronger understanding of the associated risks and the risk management practices employed by banks. As a result, it is rescinding its 2023 supervisory letter that had previously required banks to notify regulators in advance of engaging in crypto-related activities [3]. This shift indicates a move toward a more integrated, routine regulatory approach rather than a specialized oversight model.

The decision does not signal a reduction in regulatory scrutiny, but rather reflects the Fed’s confidence in its evolving expertise and existing supervisory tools. The agency emphasized that the integration of crypto activities into standard oversight will ensure continued vigilance without the need for a separate program [4]. This aligns with a broader regulatory environment in which the U.S. government has shown a more accommodating stance toward digital assets.

At the federal level, the Securities and Exchange Commission has curtailed several investigations into crypto firms, while the Treasury has supported the White House’s proposed national crypto reserve [5]. These developments suggest a general shift toward a more measured and less confrontational regulatory posture. However, the Fed’s decision is primarily driven by its internal operational assessment, rather than direct policy guidance from the executive branch.

The announcement also occurs amid increased political focus on the Federal Reserve, particularly under President Donald Trump, who has frequently criticized the central bank’s independence and monetary policy decisions. Chair Jerome Powell’s tenure as chair is set to conclude in May 2026, though he will remain a Fed governor until January 2028 [6]. Meanwhile, recent changes in leadership, including the resignation of Governor Adriana Kugler and the appointment of Stephen Miran to fill her seat temporarily, highlight ongoing shifts within the Fed’s leadership structure [7].

The termination of the “Novel Activities Supervision Program” reflects a growing institutional confidence in the ability to regulate the crypto sector within the broader framework of traditional banking oversight. This decision underscores a shift in the Fed’s approach from isolation to integration, and suggests that regulators view the crypto industry as having reached a level of maturity that can be managed under existing frameworks.