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Fed Ends ‘Novel Activities’ Supervisory Program in Boost to Crypto Banking

By  |  August 18, 2025
Fed Ends ‘Novel Activities’ Supervisory Program in Boost to Crypto Banking

The Federal Reserve Board said Friday that will formally end its so-called novel-activities supervisory program meant to monitor banks’ crypto activity. “Since the Board started its program to supervise certain crypto and fintech activities in banks, the Board has strengthened its understanding of those activities, related risks, and bank risk management practices,” the central bank said in a statement on its website. “As a result, the Board is integrating that knowledge and the supervision of those activities back into the standard supervisory process.”

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    In making the announcement, the Fed officially rescinded its 2023 advisory letter establishing the program. Under that program, U.S. banks were subject to enhanced supervision if they “concentrated in providing traditional banking activities such as deposits, payments, and lending to crypto-asset-related entities and FinTechs.”

    The move had been widely expected following the Fed’s withdrawal of two other prior crypto-related supervisory letters in April. It also had been telegraphed by Fed chair Jerome Powell at a pair of Congressional hearings in June.

    “The industry is maturing, our understanding of it is improving,” Powell said in testimony before the Senate Banking Committee. “It’s appropriate, it’s always been appropriate for banks to choose their customers and to be able to undertake activities as long as they’re safe and sound.”

    In a hearing of the House Financial Services Committee the same week, Powell said, “What I do see is a very significant change in the tone, and it really does reflect evolving thinking and the evolving status of the crypto industry… Banks are free to provide banking services to the crypto industry and to conduct crypto activities, as long as they do so in a way that is protective of safety and soundness.”

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    Read more: Crypto Regulatory Affairs: US Crypto Week Delivers as GENIUS Act Becomes Law, CLARITY Act Moves to Senate

    He also endorsed Congressional action to establish a clear regulatory structure, offering his support for the then-pending GENIUS stablecoin act.

    “It’s a great thing that bills are moving,” Powell told the House committee. “We need a stablecoin framework.”

    It was also in keeping with moves by the Trump administration to relax the rules on crypto banking. In March, the Office of the Comptroller of the Currency rescinded its 2021 interpretive letter that had limited banks’ ability to engage in certain crypto-related activity and replaced with a new letter.

    “This letter also reaffirms that the crypto-asset custody, distributed ledger, and stablecoin activities (hereafter, “crypto-asset activities”) discussed in prior letters are permissible,” the new policy statement said. “This rescission is intended to reduce burden, encourage responsible innovation, and enhance transparency. The rescission will also ensure that bank activities will be treated consistently, regardless of the underlying technology.”

    That same month, the Federal Deposit Insurance Corp. rescinded its earlier guidance that prohibited FDIC-supervised banks from engaging in crypto activity without prior approval of the agency.

    “With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” FDIC Acting Chairman Travis Hill said in announcing the new policy. “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.”