FDIC Approves Banks’ Crypto Engagement without Pre-approval, Indicating Regulatory Change
Key Takeaways:
Banks can now engage in crypto activities without prior approval from the FDIC, as long as they manage associated risks.
This policy change aims to promote innovation while also mitigating risks.
It represents a notable shift from the previous administration’s strict approach.
The Federal Deposit Insurance Corporation (FDIC) has updated its guidance for state-chartered institutions looking to operate in the cryptocurrency space. Banks can now conduct eligible crypto activities without advance approval, provided they effectively mitigate risks under FDIC supervision.
A New Path: Moving Away from the Previous Approach
The recent Financial Institution Letter (FIL-7-2025) revokes the earlier requirement for banks to inform the FDIC before engaging in crypto ventures. Acting Chairman Travis Hill stated that the FDIC is moving away from the “flawed approach” of the past three years. He emphasized forthcoming actions to clarify safe practices for banks in crypto and blockchain activities, while also enhancing security measures and compliance with financial laws to prevent misuse of digital assets.
Hill criticized the FDIC’s previous handling of crypto, highlighting over 20 letters sent to banks without a formal rule-making process. He advocated for reconsidering BSA enforcement in financial institutions, stressing that compliance should not limit banking access.
The OCC’s Influence on Crypto Regulation
This move aligns with the Office of the Comptroller of the Currency (OCC), which recently allowed national banks and federal savings associations to engage in crypto activities. Acting Comptroller Rodney E. Hood emphasized applying risk management controls to crypto, reducing regulatory burdens for banks in this sector.
This change suggests collaborative efforts among regulatory agencies to establish a streamlined framework for crypto activities in the banking sector.
Industry Response and Compliance Focus
Industry stakeholders welcomed the FDIC’s new guidance, allowing supervised entities to undertake crypto activities without prior approval. Rob Nichols from the American Bankers Association praised the regulatory clarity for fostering responsible innovation.
While some are cautious, noting potential risks in the crypto sector, the FDIC emphasizes the need for banks to manage various risks associated with crypto activities, aligning with market standards, operational challenges, and compliance requirements.
The FDIC’s decision signals a shift in the banking sector towards supporting digital assets and crypto services, unlocking new opportunities while enhancing regulatory compliance and consumer protection.
More News: First-ever Crypto Regulation Roundtable Hosted by SEC: Expect This
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