Fed Loosens Crypto Rules for Banks — Is U.S. Regulation Finally Opening Up?

The U.S. Federal Reserve has officially rolled back key rules that once restricted how banks engage with cryptocurrencies and dollar-backed tokens. The move marks a significant step toward easing regulatory pressure and signals growing openness to digital asset innovation within the U.S. banking system.

Let’s take a closer look at what changed and why it could be a big deal for the future of banking and crypto in the U.S.

Fed Drops 2022 Rule on Crypto Service Approvals

One of the biggest changes is the removal of a 2022 guideline that required state-chartered banks to notify the Fed before offering crypto services.

Under the new approach, banks no longer need to give advance notice. Instead, the Fed will supervise crypto activities like any other banking service—through its regular oversight process. This makes it easier for banks to explore crypto without dealing with extra layers of approval.

Stablecoin Restrictions Loosened

The Fed also scrapped a 2023 rule that required banks to request a “nonobjection letter” before getting involved with dollar-backed tokens, such as stablecoins.

With that rule gone, banks can now move ahead with stablecoin-related services – like issuing or handling dollar tokens – without waiting for a green light from the Fed. That’s a major step toward reducing red tape and speeding up stablecoin adoption in the traditional banking system.

The Federal Reserve, along with the FDIC and the Office of the Comptroller of the Currency (OCC), also withdrew two joint statements from last year. Those memos had warned banks to be cautious when getting into crypto.

Now, with those warnings removed, it’s clear that regulators are shifting toward a more open and flexible approach. This could encourage more banks to explore crypto partnerships or launch their own digital asset projects.

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Not a Free-for-All, But a Big Step Forward

While these changes ease restrictions, the Fed emphasized that crypto oversight isn’t going away. Regulators will still supervise digital asset activities and work on new rules that promote innovation without risking the stability of the banking system.

The message is clear: crypto is no longer off-limits, but it’s still under watch.

The timing of this move caught attention in the crypto world. Vandell Aljarrah, co-founder of Black Swan Capitalist, pointed out that just days after he was dismissed from a Fed advisory role for supporting crypto, the Fed reversed course.

“It’s validating to see the Fed now encouraging the very innovation they once blocked,” he said.

His comments highlight just how quickly the regulatory tone has shifted.

What This Means for Crypto and Traditional Banking

These updates could give U.S. banks the confidence to move further into crypto, especially in areas like stablecoins and tokenized dollars. With fewer approval requirements, innovation may pick up pace.

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