Federal Reserve withdraws crypto-unfriendly banking guidance
The US Federal Reserve announced it is withdrawing guidance that served to deter banks from engaging in crypto and stablecoin activities.
”The Board is rescinding its 2022 supervisory letter establishing an expectation that state member banks provide advance notification of planned or current crypto-asset activities,” the Board of Governors of the Federal Reserve explained in an April 24 statement.
Any crypto-related activities will now be monitored through the Federal Reserve’s normal supervisory process, it said.
The Federal Reserve is also rescinding its 2023 supervisory letter that impacted how state banks could engage in stablecoin activities.
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Its guidance initially flagged that crypto may pose risks related to safety and soundness, consumer protection and financial stability of the American financial system.
”Certain types of crypto-assets, such as stablecoins, if adopted at large scale, could also pose risks to financial stability including potentially through destabilizing runs and disruptions in the payment systems.”
The Federal Reserve also flagged that crypto is commonly used for money laundering and counter-terrorism financing at the time.
Fed also withdraws statement warning banks of crypto fraudsters
Along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, the Federal Reserve withdrew from two 2023 statements concerning banks interacting with crypto-asset sector participants that may be engaging in fraud.
”Inaccurate or misleading representations and disclosures by crypto-asset companies […] may be unfair, deceptive, or abusive, contributing to significant harm to retail and institutional investors,” the agencies added in the now-withdrawn joint statement.
The withdrawals mark the Federal Reserve’s first major move addressing crypto activities under the Trump administration, which has undertaken several initiatives to make the US more crypto-friendly and support innovation.
The Securities and Exchange Commission also revoked a controversial rule that called on banks and financial firms holding crypto to record them as liabilities on their balance sheets on Jan. 23 — eliminating a regulatory barrier that slowed crypto banking adoption.
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