Quick Summary:
- The Federal Reserve has removed the requirement for banks to seek approval before offering crypto services.
- This marks the end of restrictive guidance from 2022 and 2023.
- Banks will now be regulated through standard supervisory channels.
- Regulatory rollback signals a shift toward pro-crypto banking policy in the US.
- The move coincides with a broader rollback of crypto enforcement actions under the new administration.
- Collaboration among the Fed, FDIC, and OCC will shape the next wave of crypto legislation.
A Major Shift in US Banking Policy
In a landmark move, the US Federal Reserve has officially eliminated the need for banks to seek prior approval before offering cryptocurrency-related services. This change effectively ends the restrictive environment created by the Fed’s 2022 and 2023 supervisory letters, which required banks—especially state-chartered institutions—to notify or gain written approval before engaging with stablecoins or digital assets.
Instead, banks will now be monitored through existing supervisory mechanisms—just like any other traditional financial service. This regulatory shift opens the door for broader adoption of crypto-backed products within the US banking system.
“This shift ensures our expectations evolve alongside the risks and opens space for innovation in the banking system,” noted the Federal Reserve.
The End of “Operation Choke Point 2.0”
This policy change is seen as a clear reversal of what industry insiders referred to as “Operation Choke Point 2.0”—a period when crypto firms were quietly pushed out of the banking ecosystem under increased regulatory scrutiny. Critics accused US financial regulators of stifling innovation and creating unnecessary barriers to entry for crypto companies.
With the rollback of these restrictions, banks will no longer face reputational risks simply for working with crypto firms. The Fed, along with the FDIC and the Office of the Comptroller of the Currency (OCC), will now take a unified and open approach to regulating the space.
A New Era of Innovation in Banking
The timing of this announcement is critical. It follows a series of pro-crypto developments across various financial agencies. Earlier this year, the Securities and Exchange Commission (SEC) began withdrawing lawsuits against major players in the crypto space, including Ripple, Coinbase, and Kraken.
Under SEC Chair Paul Atkins, there has been a notable pivot toward fair oversight. Atkins has publicly committed to supporting Bitcoin and enabling responsible innovation without resorting to blanket enforcement.
What This Means for Banks and the Crypto Market
While this regulatory shift removes significant red tape, it does not signal a deregulated free-for-all. Banks are still expected to manage critical risks, including those related to cybersecurity, consumer protection, and liquidity. However, they can now engage with blockchain technologies and stablecoins without the fear of being singled out by outdated or overly cautious policies.
The message is clear: the US government is ready to support responsible crypto innovation. With the door now wide open, banks can begin offering services like crypto custody, stablecoin settlements, and blockchain partnerships—ushering in a new era of digital finance.