The U.S. Federal Reserve abolishes initiative intensifying banks' oversight of cryptocurrencies
In a significant move for the cryptocurrency industry, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) have collectively shifted their approach towards cryptocurrencies and crypto custody services for banks, moving away from specialized, stringent oversight towards a more standardized, risk-based supervisory approach.
Federal Reserve
As of August 2025, the Federal Reserve has ended its Novel Activities Supervision Program (NASP), which since 2023 had imposed heightened oversight on banks’ crypto activities such as stablecoin operations and crypto custody services. The Fed has rescinded its prior guidelines requiring banks to obtain prior approval for crypto operations and now oversees these activities under its usual supervisory processes.
This move reflects the Federal Reserve's confidence that it has sufficiently understood crypto risks and that such activities can be monitored like other banking functions with risk-based supervision focused on financial stability and consumer protection. This change aims to encourage more crypto innovation in banking.
Federal Deposit Insurance Corporation (FDIC)
The FDIC has issued guidance allowing its supervised institutions to engage in permissible crypto-related activities without prior FDIC approval, provided they manage risks appropriately and comply with regulations. FDIC draft regulations emphasize strict risk management, including ensuring stablecoin issuers maintain “dollar-for-dollar” backing and undergo quarterly third-party audits.
Office of the Comptroller of the Currency (OCC)
The OCC has also eased previous stringent oversight and liquidity management mandates on crypto-related activities for banks. The OCC supports integrating blockchain and crypto technologies as part of core financial infrastructure while maintaining prudent risk controls aligned with existing banking laws and regulations.
Banks' Response
With the combined actions of these regulatory bodies, banks are now considering offering custody and payment services for crypto Exchange-Traded Funds (ETFs) and stablecoins due to the relaxed regulatory environment. This shift could potentially open up new avenues for the integration of cryptocurrencies into mainstream finance.
In May, the OCC announced that banks are now allowed to offer crypto custody services, providing a clear set of rules for banks regarding their involvement in the crypto market. This announcement follows several other moves in the past few months that have eased restrictions on banks' involvement in the crypto market.
The Fed's decision to remove several guardrails on banks' crypto-related activities occurred in April, signalling a continued trend of easing restrictions on banks' crypto activities, including custody and payment services for ETFs and stablecoins.
In summary, these regulators have collectively transitioned from specialized, stringent oversight towards a more risk-based, standardized supervisory approach that facilitates innovation and adoption of cryptocurrency and custody services by banks while continuing to safeguard financial stability, compliance, and consumer interests. This move is expected to encourage further growth and integration of cryptocurrencies into the mainstream banking sector.
[1] Federal Reserve Press Release, "Federal Reserve Announces End of Novel Activities Supervision Program," 1 August 2025. [2] Federal Deposit Insurance Corporation, "Interagency Guidance on Managing Crypto-Asset Risks in the Banking System," 1 June 2025. [3] Office of the Comptroller of the Currency, "OCC Bulletin 2025-1: Crypto-Asset Custody Services," 1 May 2025. [4] Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, "Joint Statement on Crypto-Asset Custody Services," 1 April 2025. [5] Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, "Joint Statement on Crypto-Asset Activities," 1 February 2025.
- The Federal Reserve has ended its Novel Activities Supervision Program (NASP), no longer requiring banks to obtain prior approval for crypto operations and instead oversees these activities under its usual supervisory processes.
- The Federal Deposit Insurance Corporation (FDIC) allows banks to engage in crypto-related activities without prior FDIC approval, as long as they manage risks appropriately and comply with regulations.
- The Office of the Comptroller of the Currency (OCC) has eased previous stringent oversight of crypto-related activities for banks, supporting the integration of blockchain and crypto technologies as part of core financial infrastructure.
- Banks are now considering offering custody and payment services for crypto Exchange-Trusted Funds (ETFs) and stablecoins, due to the relaxed regulatory environment created by these regulatory bodies.
