The Federal Deposit Insurance Corp. (FDIC) has announced a significant policy change, stating it will no longer instruct banks to obtain prior approval before engaging in cryptocurrency activities. This marks a departure from the restrictive measures established in 2022, which left many financial institutions in limbo as they awaited approvals that were never forthcoming.
Historically, the FDIC has played a pivotal role in overseeing banks, particularly smaller institutions, and acting as the government’s safety net for the banking sector. Its previous stance towards cryptocurrency instigated a complex debanking narrative, especially following a legal dispute with crypto exchange Coinbase. The conflict brought to light numerous letters exchanged between the regulator and the banks under its supervision, where the FDIC had advised against pursuing new crypto initiatives while waiting for policy developments that ultimately did not materialize.
The latest guidance, released recently, comes on the heels of an administration shift spearheaded by President Donald Trump, who has appointed leaders at the FDIC and other regulatory bodies that are more favorable towards the cryptocurrency industry. This change in leadership aims to facilitate rather than obstruct banking institutions’ involvement in digital assets.
“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” declared FDIC Acting Chairman Travis Hill in an official statement. “I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”
Banks that were previously mandated to secure pre-approvals for crypto-related activities can now proceed, provided they are adequately assessing the associated risks. This development signals a broader shift in industry attitude, with all three major U.S. banking agencies, including the Federal Reserve and the Office of the Comptroller of the Currency (OCC), reconsidering their previous stances.
Notably, the OCC has also recently rescinded its analogous guidance from 2022, which was enacted during a tumultuous period for the digital asset sector marked by high-profile failures and scams, including the collapse of the FTX exchange.
For more on the OCC’s stance, see here: OCC Says Banks Can Engage in Crypto Custody and Certain Stablecoin Activities.
