FameEX Hot Topics | US Federal Reserve Removes Guidance Restricting Banks' Crypto Engagement

The U.S. Federal Reserve announced on December 17, 2025, the withdrawal of its restrictive 2023 policy statement that severely limited state member banks—particularly uninsured ones—from engaging in crypto-related activities. This marks a pivotal shift toward greater accommodation of digital assets in traditional banking, aligning with broader regulatory pivots under evolving market conditions.

The 2023 guidance imposed a "strong presumption" against permitting activities not explicitly allowed for national banks, effectively barring many state-chartered institutions from crypto services like custody or stablecoin involvement. It underpinned denials of Federal Reserve master accounts for crypto-focused banks, such as Custodia Bank. The Fed cited outdated assumptions, noting that "the financial system and the Board’s understanding of innovative products and services have evolved" significantly since then.

In its place, the Federal Reserve introduced new 2025 guidance creating a formal, case-by-case pathway for both insured and uninsured state member banks to pursue "innovative activities," including cryptocurrencies and blockchain-related services. Banks must demonstrate robust risk management, financial resilience, and compliance with safety standards. Insured banks remain subject to stricter limits under the Federal Deposit Insurance Act, while uninsured ones gain more flexibility.

Vice Chair for Supervision Michelle Bowman championed the change, emphasizing that it fosters "responsible innovation" to keep the banking sector "modern, efficient, and effective." However, Governor Michael Barr dissented in a 6-1 vote, arguing the move risks regulatory arbitrage, undermines a level playing field, and could misalign incentives with financial stability. This development boosts prospects for crypto-native institutions and signals continued U.S. regulatory thawing toward digital assets.

Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.