U.S. Fed Ends Special Crypto Oversight as Trump Deregulation Eases

The U.S. Federal Reserve has officially concluded its specialized oversight of cryptocurrency and fintech activities through the Novel Activities Supervision Program (NASP), marking a significant shift in regulatory strategy. The program, launched in August 2023, was initially designed to monitor emerging digital asset risks in the banking sector. As of August 15, 2025, the Fed announced that it will now integrate crypto-related supervision into its standard regulatory processes, reflecting a broader move toward normalization and reduced oversight [1]. This decision aligns with the Trump administration’s broader deregulatory agenda, which has sought to ease constraints on digital asset activities [2].

The end of the NASP signals increased regulatory confidence in the ability of financial institutions to manage digital asset risks within existing frameworks. By returning crypto oversight to standard bank supervision, the Fed aims to streamline processes and reduce unnecessary regulatory friction [3]. This shift is expected to lower compliance burdens for banks and financial institutions, potentially encouraging further innovation and investment in the digital asset space. Senator Cynthia Lummis has publicly endorsed the move, stating that it improves market conditions and supports financial innovation [4].

Industry observers note that the decision reflects the Fed’s satisfaction with the progress made in understanding and mitigating the risks associated with crypto activities. The move is anticipated to open the door for greater bank participation in crypto markets, with increased support for digital currencies such as Bitcoin and Ethereum expected. Analysts suggest that this regulatory shift could foster institutional growth and enhance U.S. competitiveness in the global crypto market [5].

The transition also highlights the evolving relationship between traditional finance and the crypto ecosystem. As digital assets become more integrated into mainstream financial services, regulators are adapting their approaches accordingly. By embedding crypto oversight into standard supervision, the Fed aims to foster a more stable and predictable environment for financial institutions engaging with digital assets [6]. However, experts caution that while the regulatory environment is easing, vigilance remains necessary to address new risks arising from technological advancements and shifting market dynamics [7].

The Fed’s decision follows extensive consultations with industry participants and regulatory bodies, ensuring that the move is both informed and practical. This approach is seen as a response to industry demands for reduced regulatory uncertainty and a more harmonized framework for digital asset oversight [8]. With the end of the specialized program, the focus now shifts to how banks and financial institutions will leverage their newfound flexibility to innovate while maintaining stability and compliance [9].

Sources:

[1] https://coinpaper.com/10535/fed-ends-crypto-oversight-program-as-trump-eases-digital-asset-rules

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

[3] https://coincentral.com/senator-cynthia-lummis-applauds-federal-reserves-move-to-end-crypto-supervision/

[4] https://coinpedia.org/news/crypto-gets-relief-as-fed-ends-extra-oversight-and-eases-banking-rules-experts-react/

[5] https://www.ainvest.com/news/fed-ends-special-crypto-oversight-program-2023-launch-2508/

[6] https://www.mitrade.com/insights/news/live-news/article-3-1044291-20250816

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

[8] https://www.binance.com/square/post/28358051614266

[9] https://www.bitget.com/news/detail/12560604914445