The Federal Reserve has formally withdrawn its requirement for U.S. banks to provide advance notice before engaging with crypto or stablecoin-related activities, signaling a notable shift in regulatory posture. Going forward, the central bank will treat digital asset activities like any other banking service- subject to routine supervisory oversight, not heightened scrutiny.
The decision, announced Thursday, effectively rolls back guidance issued in early 2023 in coordination with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC). At the time, the three agencies had collectively warned that engaging in crypto-related activities was “highly likely to be inconsistent with safe and sound banking practices,” particularly following the collapse of crypto exchange FTX in late 2022.
That joint statement - widely interpreted as a de facto barrier to bank participation in the digital asset space - has now been rescinded. The move by the Fed follows similar actions by the FDIC and OCC, which in recent weeks clarified that banks do not require explicit regulatory approval to engage in lawful crypto activities.
This broader realignment reflects a coordinated shift away from what critics have labeled "Operation Chokepoint 2.0" - a term used by crypto industry advocates to describe perceived political targeting of blockchain-related businesses through banking restrictions.
Since early 2023, multiple crypto firms reported being denied banking services based solely on their association with digital assets, regardless of their financial stability or risk management protocols. These denials often cited regulatory uncertainty or caution stemming from the now-rescinded guidance.
With the Federal Reserve's latest move, all three major federal banking regulators have officially reversed course, signaling a normalization of digital asset treatment under U.S. banking law.
While the FDIC and OCC had already signaled their change in approach, some industry stakeholders remained cautious about whether the Federal Reserve Board, which has a Democratic majority, would follow suit. Chair Jerome Powell, despite bipartisan support, has demonstrated a degree of institutional independence, occasionally diverging from the executive branch's political priorities.
One industry advocate, speaking anonymously to avoid professional repercussions, said they had feared Powell and the Fed's current composition might delay or dilute any reversal of the Biden-era crypto guidance. The Thursday announcement, however, confirmed the Fed’s alignment with its peer agencies.
Despite the policy shift, the Federal Reserve has not addressed access to master accounts- a key issue for crypto-focused banks such as Custodia Bank and Kraken Financial. A master account grants a bank direct access to the Fed’s payment and settlement infrastructure, a prerequisite for offering services like nationwide fund transfers without relying on intermediary institutions.
For years, crypto-native banks have sought such access, arguing that exclusion effectively prevents them from competing with traditional financial institutions. The Fed has yet to establish a clear, consistent framework for granting master accounts to digital asset banks, and Thursday’s update did not touch on that issue.
The rollback of prior restrictions marks a regulatory inflection point, particularly for banks seeking to expand services in areas like digital custody, tokenized asset settlement, and stablecoin issuance. However, while the withdrawal of restrictive guidance removes one layer of compliance complexity, it does not equate to a green light for unregulated crypto engagement. All banking activity - including digital asset services - remains subject to the standard requirements for capital adequacy, consumer protection, and risk controls.
It also remains unclear how this shift will impact pending or future litigation involving digital asset firms and banking access, especially in light of recent court decisions and ongoing political scrutiny around crypto's systemic risk.