The Federal Reserve has decided to end its specialized oversight program that scrutinized banks engaging with cryptocurrencies, indicating a shift in regulatory perspective.
Why the FED Changed Its Stance
The now-scrapped "Novel Activities Supervision Program" began in 2023 and aimed to monitor new and risky banking ventures specifically related to crypto and fintech. The FED now believes it has gained enough understanding of these risks to fold crypto banking oversight into its standard framework.
Shift Boosts Confidence in Crypto Banking
With the program's end, banks will no longer face stringent oversight for engaging with crypto firms. This change facilitates innovation and collaboration in the sector, allowing banks to interact with crypto partners without the fear of additional scrutiny.
Banking Industry Adapts to New Oversight Model
All banking activities related to cryptocurrencies will now be evaluated under the same standards as traditional banking products. This means approvals for activities like stablecoin custody and crypto projects will proceed under general rules.
The FED's decision to terminate the oversight program for crypto banks represents a move toward a more integrated approach to cryptocurrencies that may foster further sector development, but caution and responsibility will be necessary.
