Fed Shuts Down Special Crypto and Fintech Oversight Program

The Federal Reserve has officially terminated the Novel Activities Supervision Program, a specialized initiative launched in 2023 to oversee banks' involvement in emerging technologies such as cryptocurrencies, distributed ledger technology, and fintech partnerships. The program aimed to address the unique legal and supervisory challenges posed by these innovations while fostering responsible development. On August 15, 2025, the Fed announced that oversight of these activities would now be integrated into its standard supervisory process, signaling a shift in regulatory strategy [1].

The Fed stated that it has gained sufficient understanding of the nature of these activities, their associated risks, and how banks are managing them within existing frameworks. As a result, the central bank no longer views these activities as requiring a separate regulatory approach. The decision reflects growing confidence in the banking sector's capacity to handle digital asset and fintech-related risks without the need for a dedicated oversight program [5].

The original rationale for the program was to ensure that emerging technology-driven activities were appropriately managed without stifling innovation. The Fed acknowledged that such activities could raise unique legal and supervisory issues and potentially affect broader financial stability. However, the central bank now believes these concerns have been sufficiently addressed through time, experience, and standard regulatory engagement [5].

The termination of the program was widely reported by financial news outlets, with some observers interpreting the decision as a return to conventional regulatory practices. The Fed’s move has been seen as an indication that the risks associated with these new technologies are no longer considered distinct enough to warrant a specialized oversight framework [5].

The decision aligns with broader regulatory trends, as the FDIC and the Fed previously withdrew advisory statements on banking organizations’ engagement with crypto assets earlier in 2025. This suggests a coordinated effort to consolidate oversight and reduce specialized interventions across the U.S. banking sector [8].

The Fed’s action is unlikely to significantly alter the overall regulatory environment for crypto or fintech innovation. Banks will continue to operate under standard regulatory expectations, but the central bank’s confidence in their ability to manage digital asset risks internally could influence future regulatory strategies. Analysts have not provided forward-looking guidance on potential future actions, leaving the implications of the decision open to interpretation [5].

The termination of the program has also been described as a symbolic end to a period of heightened scrutiny. One report noted the program had previously been described as “keeping banks on a leash,” highlighting the stricter regulatory approach taken during its early years. With the leash now off, the focus will shift to how effectively traditional oversight can accommodate the next wave of fintech and crypto developments [6].

Source:

[1] Reuters, [https://www.reuters.com/sustainability/boards-policy-regulation/fed-scrap-program-devoted-policing-banks-crypto-fintech-activities-2025-08-15/](https://www.reuters.com/sustainability/boards-policy-regulation/fed-scrap-program-devoted-policing-banks-crypto-fintech-activities-2025-08-15/)

[5] Crypto Briefing, [https://cryptobriefing.com/crypto-bank-oversight-fed-decision/](https://cryptobriefing.com/crypto-bank-oversight-fed-decision/)

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

[8] JD Supra, [https://www.jdsupra.com/legalnews/focus-on-fintech-q2-2025-2446241/](https://www.jdsupra.com/legalnews/focus-on-fintech-q2-2025-2446241/)