U.S. Fed Ends Special Crypto Oversight Program Effective August 2025

The U.S. Federal Reserve has announced the termination of its specialized "Novel Activities Supervision Program," effective August 15, 2025, marking a significant regulatory shift for banks involved in cryptocurrency and fintech activities. The program, established in 2023, required banks offering services such as stablecoin custody and tokenization to adhere to additional regulatory guidelines. It has now been replaced with standard bank supervision, indicating the Fed’s increased understanding and comfort with the associated risks [1].

The decision reflects the central bank’s evolving stance toward digital assets. Over the past two years, the Fed has developed a clearer picture of the operational and compliance risks linked to crypto activities. As a result, it now considers these risks manageable under traditional banking frameworks, eliminating the need for a separate supervisory mechanism [2]. This shift is expected to reduce compliance costs and regulatory burdens for financial institutions, potentially encouraging them to expand their offerings in the digital asset space [3].

Banks will no longer need to follow the special program’s requirements, such as submitting additional notifications for novel crypto activities. Instead, their operations will be evaluated through regular audits and inspections that include standard risk assessments related to cybersecurity and operational resilience [4]. This change provides greater flexibility for banks to innovate in digital asset services, including tokenized payments and stablecoin solutions, without the need for extra regulatory approval [5].

The Fed emphasized that while the special program is ending, oversight of crypto-related activities remains in place. Banks will still be expected to maintain robust risk management frameworks, particularly concerning cybersecurity and operational resilience. The central bank highlighted that digital assets continue to pose unique challenges and require careful monitoring [6].

Industry observers suggest that the Fed’s decision signals growing regulatory confidence in the crypto sector’s development and could enhance the competitive positioning of U.S. banks compared to institutions in other regions [7]. However, the move does not indicate a relaxation of risk management standards. Instead, it shows the Fed’s belief that the existing supervisory framework is now sufficient to manage the sector’s evolving nature.

The termination of the program represents a pivotal moment in the regulatory treatment of digital assets. As the market continues to evolve, the Fed will likely maintain a cautious but adaptive stance, ensuring that the integration of crypto services does not compromise overall financial stability [8].

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Source:

[1] https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250815a.htm

[2] https://subscriber.politicopro.com/article/2025/08/federal-reserve-crypto-oversight-00511819

[3] https://www.cointribune.com/en/the-fed-lightens-its-control-over-banks-active-in-crypto/

[4] https://coinedition.com/fed-ends-specialized-crypto-oversight-returns-to-standard-bank-supervision/

[5] https://bravenewcoin.com/insights/federal-reserve-ends-special-crypto-oversight-program-moves-digital-asset-supervision-back-to-standard-process

[8] https://www.coindesk.com/policy/2025/08/15/u-s-fed-officially-scraps-specialist-group-meant-to-oversee-crypto-issues