The U.S. Federal Reserve is shutting down a special group that monitored banks’ crypto activities.
- The Fed will now oversee crypto through its usual process.
- Other banking regulators had already dropped stricter crypto rules.
- This change follows years of debate on how banks should handle digital assets.
Fed Ends Two-Year Crypto Oversight Program
The Federal Reserve announced it will close its Novel Activities Supervision Program. This effort began two years ago to focus on banks working with crypto. It started during Michael Barr’s term as Vice Chairman. The Fed believes it now knows enough to manage these risks without a special unit.
Return to Regular Oversight Process
The Fed said it will go back to using its normal supervisory process to check on banks’ crypto activities. This shift means banks will not face extra rules just for being involved in digital assets. Instead, they will follow standard risk rules like other business areas.
Regulators Moving in Same Direction
In April, the Fed also dropped earlier guidance that required banks to seek approval before starting crypto services. The Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) made similar moves. This shows all three government regulators are now aligned.
Background: Why the Program Was Created
The Fed started the now-ended program after Silicon Valley Bank, Silvergate Bank, and Signature Bank collapsed in 2023. These banks had close ties to crypto. Regulators wanted to prevent more such failures by paying extra attention to crypto-related actions in banking.
Political Support for Crypto-Friendly Rules
Industry leaders and some lawmakers said past crypto rules were too strict. They claimed the rules stopped crypto firms from working with banks. Under former President Donald Trump’s second term, more officials who support crypto were appointed. Now, regulators are moving to loosen restrictions.
Source: coindesk.com
