By Michael Scott
The Federal Deposit Insurance Corporation (FDIC) reversed the policy, obligating banks to seek approval to offer crypto services.
The FDIC revealed in a Friday statement a bold shift in the US regulatory landscape, allowing the banks to engage in digital assets without regulatory approval. The FDIC reversed earlier policy, though it mandates the banks to manage risks accordingly.
FDIC Reverses Crypto Policy for Banks
The change rescinds the 2022 requirement that directed the FDIC-supervised institutions to seek approval from the agency before engaging in crypto-related activities. Under the new guidance, banks can offer services involving digital assets without the agency’s advance permission.
The FDIC acting chair, Travis Hill, revealed in the statement that the action turned the page to erase the flawed approach that denied the banks participation for three years. He added that rescinding the earlier policy marks the initial steps as the FDIC lays out the new approach guiding banks’ engagement in crypto and blockchain-related activities. Nonetheless, the new approach will prioritize safety and soundness standards.
New Approach to Crypto Regulation
The precise pathway aligns with the initiative by the Office of the Comptroller of the Currency announced at the onset of March. The move outlined how national banks can participate in crypto activities, such as stablecoin transactions and custody services.
The regulatory shift portrays a bold departure from the approach of the President Joe Biden administration. Previously, the White House was critical of the banking-crypto relationships. Biden’s reign is linked with the purge of crypto projects and firms by the Securities and Exchange Commission (SEC) under Gary Gensler’s tenure.
The documents submitted at the onset of 2025 via the Freedom of Information Act (FIA) revealed the FDIC deterred the banks from undertaking crypto-related services. Notably, this coincided with the SEC’s controversial staff accounting bulleting (SAB) 121 to limit banks participating in the crypto custody services. Under Mark Uyeda as acting chair, the SEC has repealed SAB 121.
Departure from the Biden Administration’s Approach
Scrutiny into the regulatory stance of the FDIC and SEC has resulted in criticism from lawmakers who oppose the policies. The registrators profiled the initiatives as Operation Chokepoint 2.0, referring to the Obama-era policy targeting payday lenders and firearms. The critics of the Biden administration consider the Democratic government harbored similar targets to the crypto industry via the banking restrictions.
The new Financial Institution Letter (FIL-7-2025) clarifies that any FDIC-supervised institutions may participate in permissible crypto-related activities without the agency’s approval. The reversal emerges following month-long lobbying by crypto advocates for a fundamental pivot in federal banking policy.
The industry executives and advocates accused the regulators of deploying informal pressure tactics. They opposed the reputational risk claims the regulators deployed to discourage banks from serving the crypto businesses.
The American Bankers Association chief executive Rob Nichols hailed the FDIC decision. The executive indicated that the new guidance from the FDIC will enable the supervised institutions to participate in permissible crypto-related activities. He added that the US banks actively pursue ways to safely and responsibly compete across the financial services landscape. The regulatory clarity will bolster innovation in the space.
Trump Administration’s Pro-Crypto Push
The FDIC reiterates the need for awareness of risks from crypto-related activities. The agency urged vigilance on cybersecurity concerns, customer protection, anti-money laundering requirements, and a focus on market and liquidity risks. The agency mandated banks to engage with the supervisory team when actively pursuing crypto-related activities.
Friday’s declaration constitutes a part of the effort by the Donald Trump administration to eliminate hurdles targeted at digital assets. Trump’s return to the White House has seen the pro-crypto agenda dominate appointments and policy changes within the SEC. Besides the OCC’s actions, the Republican administration is pursuing crypto reserve and regulatory clarity to boost the crypto ecosystem.
The policy reversal has attracted criticism from Justin Rosario, who hosts The Opinionated Ogre podcast, indicating that the subsequent Wall Street crash could rekindle the Great Depression experience. Banking advisor Donald Billings decried the sudden change as crypto advocates acknowledged it could unlock significant capital flows to the sector.
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