- The Federal Reserve Board has withdrawn its 2023 policy statement that imposed strict limits on state member banks engaging in novel activities, including crypto-asset services.
- A new policy statement introduces case-by-case approvals for uninsured state banks, facilitating responsible innovation in the sector.
- This regulatory shift aligns with broader changes under the Trump administration, potentially easing access for crypto-focused banks.
The U.S. Federal Reserve Board announced on December 17, 2025, the withdrawal of a 2023 policy statement that restricted state member banks from participating in certain crypto-related activities beyond those allowed for national banks.
The original guidance created a presumption against such ‘novel’ activities, effectively barring state banks from holding assets like Bitcoin on their balance sheets or issuing stablecoins.
The new policy emphasizes a tailored regulatory approach, allowing uninsured state member banks to request permission for these activities on an individual basis, provided they align with safety, soundness, and financial stability standards. Insured banks remain subject to restrictions under the Federal Deposit Insurance Act. (Federal Reserve)
This update reflects the Fed’s evolving perspective on crypto risks and innovations in the financial system since 2023.
Industry stakeholders have praised the move. Caitlin Long, CEO of Custodia Bank, described the 2023 policy as ‘Operation Chokepoint 2.0 at its finest,’ noting it unfairly targeted innovative state-chartered institutions.
The change could enable more banks to offer digital asset services, such as custody or tokenized products on platforms like Ethereum, fostering greater institutional adoption.
However, not all Fed officials agreed. Governor Michael Barr dissented, arguing the revision could encourage regulatory arbitrage and undermine a level playing field among banks.
Vice Chair for Supervision Michelle Bowman highlighted the potential benefits, stating: ‘New technologies offer efficiencies to banks and improved products and services to bank customers.’
This policy overhaul accompanies other recent actions, including the closure of the Novel Activities Supervision Program and withdrawal of related supervisory letters, signaling a more accommodative stance toward crypto integration.
While the update reduces barriers, banks must still demonstrate effective risk management for any crypto engagements to gain approval.
Read more about crypto regulation on Cryptopress.
Disclaimer: This article is for informational purposes only and does not constitute advice of any kind. Readers should conduct their own research before making any decisions.
