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Fed crypto approval? Could a banking boom be on the way?

The Federal Reserve has rolled back its guidelines for activities with cryptocurrencies and stablecoins.

By Mike Hesp
• 2 min read
Fed crypto approval? Could a banking boom be on the way?

The Federal Reserve has rolled back its guidelines for activities with cryptocurrencies and stablecoins, according to an official statement from the board on Thursday. That clears a major hurdle for banks to actively participate in the crypto sector.

The original guidelines, dating to 2022 and 2023, were meant to keep U.S. banks at arm's length from the fast-growing yet risky crypto market. Banks were required to pre-maneuver proposed crypto activities and to closely monitor the use of stablecoins—digital currencies tied to the U.S. dollar, for example.

According to the Fed, the new measures are intended to ensure the policy aligns better with the changing risks in the sector while still encouraging innovation within the banking system.

In a notable move, the Fed, together with regulators FDIC and OCC, also lifted earlier warnings about crypto risks. Those statements pointed to elevated risks of fraud that investors in digital assets could face.

Yet the policy shift is not without nuance. The central bank emphasizes that it will first study whether additional guidelines are needed to support innovation, including crypto assets, in a responsible way.

The announcement was greeted with excitement View post on X by prominent figures in the crypto world. “Banks can now start supporting Bitcoin,” said Michael Saylor, chairman of MicroStrategy, on X (formerly Twitter).

This policy pivot marks a new milestone in the U.S. approach to crypto. Since Donald Trump was inaugurated as the 2024 presidential candidate, several steps have been taken toward a friendlier climate for the sector. Earlier, the IRS rule that could have hit DeFi (decentralized finance) hard was rolled back. The U.S. SEC is also in talks with industry representatives about future regulation.

With the Fed’s policy shift, the door to broader institutional adoption of crypto in the U.S. appears to be ajar again.

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