The Federal Reserve of the United States has decided to abolish special oversight over crypto banks, which was introduced in 2023 in response to the rise of digital assets.
Changes in Crypto Banking Regulation
In 2023, a specialized monitoring framework was established to examine 'novel activities' such as digital asset services within regulated banks. Now, the central bank claims that the accumulated insights and knowledge about associated risks and management methods enable the return of these services to the standard oversight process. The original guidance establishing this program will be formally withdrawn.
Criticism and Association with Operation Chokepoint
The initiative has long faced criticism for being associated with elements of the so-called Operation Chokepoint, where financial regulators allegedly pressured banks to sever ties with politically disfavored sectors, including crypto firms, during the Biden administration.
Historical Context and Trump's Directive
The directive signed by President Donald Trump explicitly calls for the cessation of any practices that target companies or individuals for political, religious, or ideological reasons. This decision marks a step toward more open banking practices concerning digital assets.
The Federal Reserve's lifting of special oversight could simplify the integration of digital assets into the banking system, influencing banks' interactions with crypto companies.
