The US Federal Reserve has removed past restrictions on banks engaging with cryptocurrencies and stablecoins, allowing them to freely provide these services under regular supervision. This decision indicates a potentially friendlier stance towards crypto, building on trends from the Trump administration. The move could spur innovation and provide consumers with access to crypto through regulated banks.
In a significant policy shift, the US Federal Reserve has lifted restrictions on banks dealing with cryptocurrencies. Announced on April 24, the Fed stated it will stop issuing supervisory letters from 2022 and 2023, which previously required banks to seek approval before engaging in crypto services and limited stablecoin operations. Now, crypto activity will simply be monitored as part of the Fed’s regular oversight processes.
This development, seen as a constructive move towards a more crypto-friendly environment, aligns with previous initiatives initiated during the Trump administration. Michael Saylor, co-founder of Strategy and a prominent advocate for Bitcoin, welcomed the news on X, asserting, “Banks are now free to begin supporting Bitcoin.”
Furthermore, the Fed has rescinded joint guidance with the FDIC and OCC which cautioned banks about potential fraud risks associated with crypto firms. Such warnings had prompted doubts regarding consumer protection and raised alarms about financial stability and money laundering.
This policy change follows the SEC’s decision in January to scrap a requirement for banks to classify their crypto holdings as liabilities, a move that many believed hindered crypto adoption within the banking sector. With these adjustments, there’s potential for the US banking system to deepen its engagement with cryptocurrencies, especially in stablecoins and Bitcoin.
Overall, this could catalyse innovation in the crypto realm and enable consumers to access digital currencies via regulated traditional financial institutions. It appears to signal the dawn of crypto banking in the United States, which might lead to more robust framework for cryptocurrencies going forward.
Also, it’s worth noting that Fed Chair Powell has previously called for a legal framework for stablecoins, highlighting ongoing discussions surrounding regulation in this rapidly evolving market.
