US Federal Reserve shutters crypto bank supervision program amid broader regulatory pullback

The U.S. Federal Reserve Board said it is ending its program supervising banks involved in crypto and financial technology, marking the latest move by the central bank to pull back digital asset guidance. 

In a statement on Friday, the Fed said since debuting the program, it has "strengthened its understanding of those activities." 

"As a result, the Board is integrating that knowledge and the supervision of those activities back into the standard supervisory process and is rescinding its 2023 supervisory letter creating the program," according to the statement. 

The central bank announced the "Novel Activities Supervision Program" in August 2023 and said it would enhance its oversight banking organizations working on crypto, distributed ledger technology, and other activities. It also examined “technology-driven partnerships with nonbanks” delivering financial services. 

The Federal Reserve, along with banking regulators, has taken a different approach to crypto than under the previous Biden administration, when the now-retracted program was created. In April, the Federal Reserve said it was withdrawing guidance that previously discouraged banks from participating crypto and stablecoin activities.

The Fed, alongside the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, also released a joint statement last month setting out how existing rules apply to banks holding crypto on customers' behalf. 

Over the past year, since President Donald Trump took office, regulatory agencies have overall shifted their stance toward crypto. The FDIC has said it will allow financial institutions to engage in crypto activities without notifying the agency ahead of time, and the Securities and Exchange Commission has embarked on "Project Crypto" to update its digital asset rules.