Federal Reserve Ends Special Crypto Bank Oversight Program

The Federal Reserve has officially ended its specialized regulatory program for banks' cryptocurrency and fintech activities, returning oversight to standard supervisory processes [1]. Announced in a press release on August 15, 2025, the move follows the conclusion of a two-year initiative launched in 2023 that imposed additional scrutiny on banks engaging with digital assets [2]. By integrating crypto supervision into general banking regulation, the Fed aims to streamline oversight and reduce the regulatory burden on financial institutions [3].

The decision marks a key regulatory shift, particularly regarding stablecoin issuance and custody. US banks are now free to offer crypto-related services—including the issuance of dollar-backed stablecoins—without the need for prior approvals or notifications [4]. This change is expected to facilitate greater institutional participation in the crypto market, as banks can now allocate resources more efficiently to develop and offer crypto-based products [5].

The Fed emphasized that the knowledge gained from the specialized program will now be embedded in routine supervision [6]. As part of the transition, the Board has rescinded its 2023 supervisory letter that outlined the enhanced monitoring requirements for crypto activities [7]. The shift aligns with broader efforts to standardize digital asset regulation, including recent policy changes under the Trump administration aimed at addressing perceived biases in banking practices [8].

Industry analysts anticipate that this regulatory easing will spur increased activity in crypto custody, trading, and stablecoin issuance. Similar patterns have been observed in jurisdictions like the EU, where regulatory adjustments have led to higher institutional participation [9]. For example, the European Union’s 2023 regulatory rollbacks saw a noticeable uptick in institutional capital flowing into the crypto market [10]. The removal of barriers is seen as a step toward a more integrated financial system where traditional and digital assets coexist under uniform regulatory frameworks [11].

Critics of the previous regulatory approach, including crypto advocates like Michael Saylor, have welcomed the change as a positive development for the industry. Saylor noted that the Fed’s decision “clears the road” for deeper collaboration between banks and crypto firms [12]. The change also reflects the Fed’s confidence in banks’ ability to manage the risks associated with crypto assets, which were previously subject to heightened scrutiny [13].

With the Fed’s shift, the regulatory environment for crypto banking in the US is expected to become more predictable and less burdensome. The market anticipates that this will encourage more banks to offer crypto services without facing the same level of targeted oversight [14]. As digital asset adoption continues to grow, the Fed’s return to conventional regulatory approaches may signal a broader acceptance of crypto within the mainstream financial system [15].

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Source:

[1] Federal Reserve Board (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250815a.htm)

[2] Bloomberg.com (https://www.bloomberg.com/news/articles/2025-08-15/fed-to-end-program-that-stepped-up-bank-crypto-scrutiny)

[3] CoinGape (https://coingape.com/federal-reserve-to-end-program-that-targeted-crypto-banking/)

[4] BeInCrypto (https://beincrypto.com/federal-reserve-loosens-crypto-monitoring-banks/)

[5] TheStreet (https://www.thestreet.com/crypto/markets/federal-reserve-removes-massive-hurdles-for-crypto-bankers)

[12] Stocktwits (https://stocktwits.com/news-articles/markets/cryptocurrency/michael-saylor-says-road-is-now-clear-for-bitcoin-and-banking/chsPvwORdft)

[15] Binance (https://www.binance.com/en/square/post/28356207218858)