Federal Reserve Revokes Restrictive Guidance on Bank Crypto Activities

The US Federal Reserve has withdrawn a policy statement from 2023 that had effectively prohibited the banks it supervises from engaging with cryptocurrency. This action is viewed as another step in the US regulatory pivot toward a more accommodating stance on digital assets.

That guidance had established a strict equivalence, mandating that state-chartered banks without federal deposit insurance follow the exact same permissions as nationally insured banks. Its underlying premise was that comparable financial activities inherently carry comparable risks.

For uninsured institutions, this meant they could not offer services—including those involving crypto assets—that were not already permitted for national banks. This automatically rendered them ineligible for critical Federal Reserve membership and services.

The central bank stated that a principal factor behind the withdrawal is the guidance’s obsolescence. It noted that both the financial environment and the Board’s own understanding of novel products, including those built on networks like Bitcoin and Ethereum, have matured.

“Thus, the 2023 policy statement is no longer suitable and has been rescinded,” the announcement concluded. Caitlin Long, CEO of Custodia Bank, endorsed the decision in an online post, explaining that this specific policy was the grounds for her bank’s earlier denied application for a Fed master account.