FRB eases crypto restrictions on supervised entities in alignment with the new administration’s support for the digital asset industry.
By Arthur S. Long, Pia Naib, and Deric Behar
On April 24, 2025, the Board of Governors of the Federal Reserve System (FRB) announced that it was rescinding guidance for banks issued in 2022 related to digital asset and stablecoin activities. It also announced that, together with the Federal Deposit Insurance Corporation (FDIC), it is joining the Office of the Comptroller of the Currency (OCC) (collectively, the agencies) in withdrawing from two 2023 joint statements that limited banks’ ability to engage in digital asset activities.
The FRB’s actions appear responsive to an April 1, 2025 letter sent by House Committee on Financial Services Chairman French Hill to FRB Chairman Powell, stating that the FRB “should rescind SR 22-6 and SR 23-8, as both impose unnecessary supervisory burdens on the use of distributed ledger technology.”
According to the FRB, “[t]hese actions ensure the Board’s expectations remain aligned with evolving risks and further support innovation in the banking system.”
FRB Rescinds Crypto Risks Supervisory Letters
SR Letter 22-6
On August 16, 2022, the FRB issued a Supervision and Regulation Letter that outlined its expectations for FRB-supervised banking organizations engaged in cryptoasset-related activities (SR Letter 22-6). This followed the publication of a financial institution letter issued by the FDIC in April 2022 (the FDIC Letter) and an interpretive letter issued by the OCC in November 2021 (the OCC Letter). Both letters similarly addressed supervisory expectations in connection with cryptoasset-related activities that FDIC-supervised institutions and OCC-chartered banks (i.e., national banks and federal savings associations) engaged in, respectively. (For more information, see this Latham blog post)
According to SR Letter 22-6, the cryptoasset sector presented potential opportunities to banking organizations, their customers, and the overall financial system. However, the Federal Reserve noted five areas in which cryptoassets posed distinct risks: (i) Technology and operations risks related to cybersecurity and governance; (ii) Anti-money laundering (AML) and countering the financing of terrorism (CFT) risks; (iii) Consumer protection risks; (iv) Legal compliance risks; and (v) Financial stability risks.
In light of these risks, FRB-supervised banking organizations were advised by the FRB to:
- notify their lead supervisory point of contact at the FRB prior to engaging in cryptoasset-related activities;
- assess whether such cryptoasset-related activities are legally permissible under relevant state and federal laws;
- determine whether regulatory filings are required under the applicable federal banking laws; and
- have adequate systems, risk management, and controls in place to address the relevant cryptoasset-related risks and to conduct such cryptoasset-related activities in a safe and sound manner and in a way that is consistent with all applicable laws.
As a result of rescinding SR Letter 22-6, the FRB will no longer expect banks to notify the FRB prior to engaging in cryptoasset-related activities. The FRB “will instead monitor banks’ crypto-asset activities through the normal supervisory process.”
SR 23-8
On January 27, 2023, the FRB issued a policy statement (Policy Statement) under Section 9(13) of the Federal Reserve Act to “limit the activities of state member banks and subsidiaries of state member banks in a manner consistent with section 24 of the Federal Deposit Insurance Act.” Section 24 states that an FDIC-insured state bank may not engage as a principal in any activity that is not permissible for a national bank, unless the FDIC determines that the activity would not pose a significant risk to the Deposit Insurance Fund and the insured state bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate federal banking agency.
The Policy Statement governed “novel activities” that both FDIC-insured state member banks and non-insured state institutions (that may be admitted to FRB membership) may propose, including issuing, holding, or transacting in dollar tokens1 (i.e., stablecoins) to facilitate payments. A state member bank must first consult federal statutes, OCC regulations, and OCC interpretations to determine whether national banks are permitted to undertake such novel activities. If none of the sources authorizes the activity, then state member banks must investigate whether federal statute or part 362 of the FDIC’s regulations give state banks permission to engage in the activity. If no authority for a state bank exists, a state member bank may not engage in the activity unless it has received the Federal Reserve’s permission under Section 208.3(d)(2) of Regulation H. Under that provision, a state member bank may not, without Federal Reserve permission, change the general character of its business or the scope of the corporate powers it exercised at the time of its admission to membership. (For more information, see this Latham blog post)
On August 8, 2023, the FRB published the related SR 23-8, Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens. SR 23-8 held that for a state member bank to obtain a written notification of supervisory nonobjection from the FRB, it must “demonstrate that it has established appropriate risk management practices for the proposed [stablecoin] activities, including having adequate systems in place to identify, measure, monitor, and control the risks of its activities, and the ability to do so on an ongoing basis.”
As a result of rescinding SR Letter 23-8, a state member bank is no longer required to receive a written notification of supervisory nonobjection from the FRB before engaging in the covered cryptoasset and stablecoin activities.
FRB Withdraws From Banking Agencies’ Joint Statement on Crypto Risks
On January 3, 2023, the agencies issued a concise joint statement on cryptoasset risks to banking organizations (“Joint Statement on Crypto-Asset Risks to Banking Organizations”). With the safety and soundness of the US banking system in mind, the statement addressed the various risks that the agencies viewed as being associated with cryptoassets and cryptoasset sector participants. According to the statement, “banking organizations should ensure that crypto-asset-related activities can be performed in a safe and sound manner, are legally permissible, and comply with applicable laws and regulations, including those designed to protect consumers.” (For more information, see this Latham blog post)
On February 23, 2023, the agencies published a related joint statement (“Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities”) that addressed cryptoasset risks and liquidity risks to banking organizations resulting from cryptoasset market vulnerabilities.
On March 7, 2025, the OCC withdrew itself from the two joint statements. According to the OCC, the withdrawal was “intended to reduce burden, encourage responsible innovation, and enhance transparency.” (For more information, see this Latham blog post)
On April 24, 2025, the FRB and FDIC announced (here and here) that they were joining the OCC in withdrawing from the two joint statements.
FRB Following the OCC and FDIC’s Lead
The FRB’s announcement follows the OCC and FDIC’s other recent actions intended to remove roadblocks to crypto activities in the banking sector:
- On March 7, 2025, the OCC reaffirmed that national banks and federal savings associations (collectively, banks) may participate in a range of cryptocurrency activities, including crypto custody, certain stablecoin activities, and participation in independent node verification networks. Specifically, the OCC issued Interpretive Letter 1183, which rescinds Biden-era Interpretive Letter 1179 (November 18, 2021). Interpretive Letter 1179 directed that the activities addressed in previous OCC interpretive letters (i.e., 1170 (bank crypto custody), 1172 (bank stablecoin reserve holding), and 1174 (banks acting as a node on a distributed ledger)) were legally permissible, provided the bank could demonstrate, to the satisfaction of its supervisory office, that it had controls in place to conduct the activity in a safe and sound manner. The OCC stated in Interpretive Letter 1183 that the permissibility of the activities described in Interpretive Letters 1170, 1172, and 1174 were reaffirmed, and that the supervisory nonobjection process described in Interpretive Letter 1179 “is no longer necessary.” The OCC stated that its staff has increased its knowledge and supervisory expertise regarding cryptoasset activities. As part of its ongoing supervisory process, the OCC will, however, further examine the activities described in Interpretive Letters 1170, 1172, and 1174. (For more information, see this Latham blog post)
- On March 28, 2025, the FDIC issued a Financial Institution Letter (FIL-7-2025) that provides new guidance for FDIC-supervised institutions engaging in or seeking to engage in crypto-related activities (the Guidance). Specifically, the Guidance clarifies that FDIC-supervised institutions can engage in permissible crypto-related activities without receiving prior FDIC approval. The Guidance rescinds FIL-16-2022 (Notification of Engaging in Crypto-Related Activities), issued on April 7, 2022, which initially established the prior notification requirement for crypto-related activities. The rescission of FIL-16-2022 by the FDIC predates a series of letters sent on April 1, 2025, by House Committee on Financial Services Chairman French Hill to the heads of the FDIC, OCC, FRB, CFPB, SEC, and Financial Stability Oversight Council, requesting the rescission, modification, or re-proposal of specific Biden administration actions. In the letter addressed to FDIC Acting Chairman Travis Hill, the committee stated that “[t]he FDIC should withdraw FIL-16-2022, as it imposes unnecessary supervisory burdens on banks’ use of distributed ledger technology.” (For more information, see this Latham blog post)
Conclusion
In the wake of these rescissions and withdrawals, new guidance from the agencies regarding supervised institutions’ engagement with digital assets may be under development. The FRB noted in its announcement that it will work with the FDIC and OCC “to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate.” Similarly, the FDIC noted that the agencies “are exploring issuing additional clarity with respect to banking organizations’ crypto-asset and related activities in the coming weeks and months.”
The FRB’s actions reflect a broader trend among financial market regulators to reassess crypto-related policies and remove barriers that were established during the previous administration. Similar to the OCC and FDIC (as well as those by the Securities and Exchange Commission and the Commodity Futures Trading Commission), these moves are consistent with the Trump administration’s efforts to reverse prior restrictions that hindered banks from engaging with digital asset companies or developing their own digital asset products, such as stablecoins. In addition, these regulatory changes are linked to legislative initiatives aimed at promoting innovation and reducing oversight of reputational risk, which banks have often cited as reasons for not servicing crypto companies.
With the executive and legislative branches committed to expanding the digital asset economy in the US and eliminating debanking practices, federal banking regulators are showing a readiness to rescind policies reflective of the previous administration’s cautious approach to crypto.
- Defined in the Statement as “tokens denominated in national currencies and issued using distributed ledger technology or similar technologies to facilitate payments.” ↩︎