The Federal Reserve has withdrawn three key pieces of crypto-related guidance from the Biden era, including supervisory approvals for banks. This shift, made in collaboration with FDIC and OCC, signals a move towards a less restrictive approach to cryptocurrency engagement. Senator Lummis, however, critiques the changes as insufficient, arguing they’ve harmed innovation.
In a surprising move, the Federal Reserve has retracted three significant pieces of cryptocurrency-related guidance from the Biden administration. This includes two supervisory letters that previously required banks to obtain prior approval before engaging in crypto or stablecoin activities. Additionally, the Fed joined forces with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to rescind a 2023 statement highlighting major risks associated with cryptocurrencies.
This shift means banks will no longer have to notify the Fed about their crypto or stablecoin operations. Instead, the Fed plans to oversee these activities through standard supervisory channels. They emphasised that these updates align their expectations with the evolving risks in the financial landscape, which should also encourage innovation within the banking sector.
During the Biden era, regulators were seen by many in the crypto community as unfriendly to digital assets, sparking claims of a coordinated effort—dubbed Operation Choke Point 2.0—aimed at limiting crypto’s presence in traditional finance. Gary Gensler, then Chair of the Securities and Exchange Commission, infamously labelled the industry as rife with “hucksters, fraudsters, scam artists, and Ponzi schemes” back in 2023.
Contrastingly, the latest regulatory team under Trump 2.0 appears to be embracing a more crypto-friendly stance. They’ve been rolling back prior regulations, discontinuing legal actions against crypto companies, and creating a special task force within the SEC focused on developing a regulatory framework for the sector. This looks like a significant pivot towards a more supportive environment for crypto.
However, not everyone is convinced that these changes signify true progress. Senator Cynthia Lummis from Wyoming expressed her skepticism on X, claiming the Fed’s withdrawal of guidance is “just noise.” She pointed out that the Fed’s past actions have harmed companies and stifled innovation within the industry, insisting that the struggle for better regulation is far from over. Lummis has consistently advocated for digital assets and previously proposed legislation to establish a regulatory framework, and she’s recently taken the helm of the first-ever Senate panel on digital assets.
As of now, a spokesperson for the Federal Reserve has not responded to requests for further comment regarding this withdrawal.
