Federal Reserve withdraws restrictive policies, banks' crypto businesses gain regulatory easing

【Crypto News】The Federal Reserve recently made a key decision—reversing the strict restrictions set in 2023 on state member banks’ involvement in the crypto industry. The new policy framework was introduced this year, reflecting an adjusted understanding of crypto-related risks by regulators.

Specifically, the rules have changed significantly. State member banks with FDIC deposit insurance still remain under the constraints of Section 24 of the Federal Deposit Insurance Act, with no loosening there. However, for state member banks without deposit insurance, new opportunities have emerged—they can now apply to the Federal Reserve on a case-by-case basis to seek approval for certain previously prohibited activities. The operational space for banks in crypto asset-related activities has clearly expanded.

Why the change? The Federal Reserve itself explained it clearly: over the past few years, the understanding of innovative products and services by the financial system and regulators has been upgraded. The old policy, in name only, was essentially ineffective—banks basically couldn’t include crypto assets like Bitcoin and Ethereum on their balance sheets, nor issue stablecoins. The new policy aims to break this deadlock.

This round of adjustments marks a continued positive trend in the US regulatory environment, especially against the backdrop of the current government’s clear support for the digital asset industry. This summer, the Federal Reserve shut down its dedicated crypto bank regulation program, and subsequently, together with relevant agencies, issued guidelines on digital asset custody. Step by step, the regulatory framework is being reshaped.