Federal Reserve wraps up crypto supervision program on banks
- The Federal Reserve closed its supervision program on certain crypto activities in banks.
- The agency claims it rescinded a 2023 supervisory letter initiating the program and will return to its normal monitoring process.
- The move follows the Fed's statement in July clarifying that banks can custody crypto for customers.
The Federal Reserve (Fed) ended its Novel Activities Supervision Program that monitored crypto activities in banks, with plans to resume its normal supervisory process, according to a statement on Friday.
Fed ends supervision of crypto activities in banks
The Federal Reserve Board announced in a statement on Friday that it has ended its program that monitors banks engaged in crypto activities.
The Board said it will return to the "normal supervisory process" used to monitor these activities.
"The Federal Reserve Board on Friday announced that it will sunset its novel activities supervision program and return to monitoring banks' novel activities through the normal supervisory process," the statement said.
The Fed claims the program helped it gain a better understanding of those sectors and how they apply in banking, including risk management practices, since its launch..The knowledge acquired will be integrated into its "standard supervisory process." It also mentioned that it withdrew a supervisory letter that gave birth to the program, known as the Novel Activities Supervision Program, in 2023.
The initiative was launched to enhance the agency's oversight of banks' activities related to crypto.
The Board stated at the time that the program would help manage risks to safeguard the banking system.
In April, the Fed ended its guidance on crypto and stablecoin activities for banks and updated its expectations for how those activities should be conducted.
The agency also joined the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) to issue a statement in July, clarifying that banks could offer safekeeping and custody services for customers' crypto assets.
The move comes as more government agencies have adopted a flexible stance towards crypto under President Donald Trump's administration.
Other agencies, such as the Securities & Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), are also seeking regulatory measures for the crypto industry.
Author
Michael Ebiekutan
FXStreet
With a deep passion for web3 technology, he's collaborated with industry-leading brands like Mara, ITAK, and FXStreet in delivering groundbreaking reports on web3's transformative potential across diverse sectors. In addi
