U.S. regulators roll back crypto caution, signaling shift toward innovation

U.S. banking regulators has announced that they are rescinding several documents that had previously urged banks to exercise caution when engaging in cryptocurrency-related activities.

The Federal Reserve revealed it is withdrawing two supervisory letters that required banks to seek prior approval from regulators before participating in crypto-asset and stablecoin operations.

In a coordinated move, the Fed also joined the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) in scrapping a pair of 2023 statements that had advised banks to be vigilant about the risks tied to cryptocurrencies.

Under the previous guidance, regulators had cautioned banks about potential volatility, legal uncertainties, and liquidity risks associated with providing crypto-related services or banking crypto firms.

Eliminating those warnings marks another step by the Trump administration toward creating a more crypto-friendly regulatory environment.

In its announcement, the Fed stated that regulators are now evaluating whether new guidance is needed to “support innovation, including crypto-asset activities.”

The OCC had already taken a similar step in March, becoming the first U.S. regulator to dismantle cautionary guidance introduced under the prior administration, making it easier for banks to enter the crypto space.