The Federal Reserve has rescinded most of its anti-crypto guidance, opening the door for U.S. banks to engage in crypto activities. But one key obstacle remains.

Federal Reserve Rolls Back Crypto Restrictions

In a landmark move for the crypto industry, the Federal Reserve (Fed) announced on April 24, 2025, that it had withdrawn the majority of its previous anti-crypto guidance. These policy changes mean that U.S. banks will no longer need to notify the Fed before engaging in crypto-related activities, such as trading or custody services. This marks a significant shift from the Fed’s 2022 and 2023 supervisory letters, which had imposed strict oversight on banks’ involvement with digital assets.

The primary impact of this policy change is that banks now have more autonomy in offering crypto services, and they will only be subject to routine monitoring rather than the special notifications previously required. By rescinding these letters, the Fed has signaled a willingness to move toward more flexible regulation that could foster innovation in the digital assets sector. This move is being celebrated by many in the crypto community, as it opens up new opportunities for U.S. banks to explore cryptocurrency services without facing as many regulatory hurdles.

Why the Fed’s Withdrawal of Crypto Guidelines is Important

The rescinding of these supervisory letters is an important step for the future of crypto in the U.S. economy. Prior to this change, the Fed had placed significant restrictions on banks’ ability to engage with cryptocurrencies, including the requirement for prior approval before they could handle crypto-related transactions. Additionally, a specific letter issued in 2023 addressed stablecoins, particularly dollar-pegged ones, by creating a “supervisory non-objection” process. With these letters now repealed, banks will have more flexibility to develop and offer crypto-related products, such as Bitcoin trading and custody solutions.

This policy shift is likely to encourage more banks to enter the crypto space, bringing additional liquidity and stability to the market. By eliminating some of the more cumbersome regulatory restrictions, the Fed is effectively enabling U.S. financial institutions to become more competitive in the global crypto market. This may also spur innovation in blockchain technology and decentralized finance (DeFi), areas that are rapidly gaining traction across the globe.

The Remaining Roadblock: Token Issuance Concerns

Despite the positive changes, one major obstacle remains in the Fed’s regulatory framework. While the Fed has rolled back most of its anti-crypto guidance, it has not rescinded a critical piece of regulation issued in January 2023. This guidance, which was approved in a 7-0 board vote, specifically concerns banks issuing tokens on a blockchain. The Fed expressed concerns that the issuance of such tokens might not align with “safe and sound banking practices,” effectively stalling progress for banks wanting to fully embrace blockchain technology.

For many in the crypto industry, this represents a significant challenge. Caitlin Long, the CEO of Custodia Bank, has highlighted that this particular piece of guidance creates a disadvantage for Fed-regulated institutions compared to those under the oversight of the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). Unlike the Fed, these agencies have shown a greater willingness to embrace blockchain-based innovation. As a result, institutions regulated by the OCC and FDIC may have more freedom to explore token issuance, which is seen as a key aspect of the next wave of crypto financial products.

The Potential for Future Crypto Innovation

While the current regulatory landscape is far from perfect, the Fed’s decision to pull back most of its restrictive measures indicates that future regulatory reforms may be more favorable toward crypto innovation. With many stakeholders, including crypto advocates and industry leaders, expressing optimism, the next steps will likely focus on creating clearer rules around areas like stablecoins and tokenization.

There is also speculation that the forthcoming stablecoin bill could help resolve the remaining concerns around token issuance. This bill, which is expected to address the regulatory framework for stablecoins and related digital assets, could provide clarity on the Fed’s stance toward blockchain-based tokens and whether banks can issue their own. Industry insiders like Caitlin Long are hopeful that the bill will prompt further regulatory adjustments that could benefit both crypto startups and established financial institutions.

The shift in the Fed’s stance also highlights the broader trend of growing support for digital assets among regulators worldwide. With financial institutions increasingly adopting blockchain and crypto technologies, the regulatory landscape is likely to evolve in ways that foster innovation and growth in the crypto market.

The Future of U.S. Crypto Regulation

Looking ahead, U.S. crypto regulations are expected to continue evolving. While the Fed’s rollback of anti-crypto guidance is a step in the right direction, the industry’s future depends on how regulators balance innovation with risk management. The ongoing discussions between the Fed, OCC, and FDIC will be crucial in shaping the regulatory environment for crypto in the U.S.

As U.S. banks begin to explore more crypto services, attention will turn to the stablecoin bill, which could provide the necessary framework to encourage further development of blockchain-based financial products. Additionally, the broader push for digital currency adoption, including central bank digital currencies (CBDCs), will continue to influence the regulatory landscape.

 

The key question remains: will the Fed’s decision to ease restrictions be enough to propel the U.S. to the forefront of global crypto innovation, or will regulatory uncertainty continue to stymie progress? The coming months and years will likely reveal the answer.

FAQ Section

1. Why did the Federal Reserve roll back its anti-crypto guidance?
The Federal Reserve rescinded most of its anti-crypto guidance to provide U.S. banks with more flexibility to engage in cryptocurrency activities, thereby fostering innovation and enabling financial institutions to explore crypto-related services.

2. What crypto activities are U.S. banks now allowed to engage in without prior approval from the Fed?
U.S. banks no longer need to notify the Federal Reserve before engaging in crypto activities like trading, custody, or other related services. The Fed will only monitor these activities as part of its regular supervisory process.

3. What is the remaining obstacle for U.S. banks in the crypto space?
The remaining obstacle is the Fed’s 2023 guidance on token issuance, which prohibits banks from issuing tokens on a blockchain. This restriction remains in effect and has not been rescinded, creating challenges for banks that wish to fully embrace blockchain innovation.

4. How will the stablecoin bill impact U.S. crypto regulations?
The stablecoin bill, which is expected to be introduced soon, could provide clarity and guidelines for the regulation of stablecoins and blockchain-based tokens. It may also address the Fed’s concerns about token issuance, potentially resolving the remaining regulatory obstacle.

5. What does the future hold for U.S. crypto regulations?
The future of U.S. crypto regulations depends on the ongoing collaboration between the Federal Reserve, OCC, and FDIC. Further regulatory changes may foster innovation, but the industry must navigate the complexities of regulatory uncertainty to drive growth in the crypto space.