Key Takeaways
- The Federal Reserve ended pre-approval requirements for bank Bitcoin activities.
- Banks no longer need Fed sign-off to work with dollar tokens or engage in Bitcoin-related services.
- The move may revive bank relationships with Bitcoin firms following past restrictions.
The U.S. Federal Reserve has removed previous requirements that restricted banks’ involvement with Bitcoin and dollar tokens, signaling a potential shift in how financial institutions engage with the sector.
Regulatory changes explained
In an April 24 statement, the Fed confirmed it had rescinded a 2022 supervisory letter that required banks to notify regulators before launching any Bitcoin-related activities.
Banks will now be supervised under standard procedures without needing to submit advance notice.
It also withdrew a 2023 mandate requiring state member banks to seek supervisory non-objection before dealing in dollar tokens.
That directive had previously required banks to prove they had adequate infrastructure to handle risks tied to digital asset operations.
Policy statements rescinded
Additionally, the Federal Reserve, FDIC, and OCC rescinded two 2023 policy statements that warned banks of Bitcoin-related dangers, including the possibility of liquidity issues due to market volatility.
Path to financial innovation
Regulators said these reversals pave the way for new guidelines that can promote financial innovation while ensuring systemic stability.
Banking sector impact
The move follows years of tension between the banking and Bitcoin sectors, with many firms previously facing “debanking.”
But with the Trump administration now backing a friendlier stance, renewed integration appears more likely.
Industry reactions
David Wells, CEO of Enclave Markets, said that treating Bitcoin as liquid collateral would…
… release significant capital into the crypto markets.
VALR CEO Farzam Ehsani added:
Crypto related activities are becoming more and more accepted by ‘the system.’
