Fed Drops Crypto Rules, Banks Get Freedom-What This Means For Your Wallet!

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Fed Signals Pro-Innovation Shift to Support Digital Asset Banking

The Federal Reserve is working on clearer rules for digital assets and is considering how to regulate companies that issue stablecoins. Vice Chair Michelle W. Bowman shared these plans and recent supervisory updates while speaking to the Senate Banking Committee.

Fed Commits to Clarifying Digital Asset Rules for Banks

U.S. banking regulators are becoming clearer on how they will oversee digital assets like cryptocurrencies. Michelle Bowman, a leader at the Federal Reserve, recently told a Senate committee about steps the agency has already taken and future plans to encourage responsible innovation in this area within banks.

“The Federal Reserve is encouraging banks to innovate to improve the products and services they provide. We have rescinded several policies that were intended to hinder innovation,” Vice Chair for Supervision Bowman stated. “We are also working with the other banking regulators to develop regulations that include capital and liquidity for stablecoin issuers as required by the GENIUS Act.” She continued:

We’re working to create clear rules for digital assets so banks can confidently support new technologies and businesses in this area. This means explaining what banks are allowed to do and offering guidance on innovative ideas as they develop.

Together, these remarks reflect a recalibration of oversight for crypto custody, tokenized payments, blockchain-based services, and stablecoin issuance within prudential guardrails.

In practice, the Federal Reserve rolled back several crypto-specific supervisory hurdles in 2025. In April, it rescinded SR 22-6 / CA 22-6 and SR 23-8 / CA 23-5, ending advance notification and written non-objection requirements for crypto activities and dollar tokens. It later sunset the Novel Activities Supervision Program in August, withdrew 2023 joint crypto risk statements, replaced restrictive Regulation H guidance in December, and in February 2026 moved to codify the removal of reputational risk from supervision.

As an analyst, I’ve been following Chair Bowman’s statements closely, and she’s made it clear that oversight of smaller banks entering the fintech space needs to be carefully calibrated. She believes community banks shouldn’t be held to the same strict standards as the larger institutions, and there’s a real opportunity to create regulations and supervisory approaches that are specifically designed for their size and unique situation. She’s advocating for a proportional approach, recognizing that one-size-fits-all rules wouldn’t be effective or appropriate.

We need to stop applying the same strict rules designed for big banks to smaller banks, which pose less risk and are simpler to manage.

The combined approach signals a potential recalibration of supervision, as regulators work toward stablecoin rule development and digital asset clarity within existing statutory authority.

FAQ 🧭

  • What does the Federal Reserve’s new approach mean for crypto in banks?
    It signals clearer rules for crypto custody, stablecoins, and tokenized payments within regulated banks.
  • How will stablecoin issuers be regulated under the new framework?
    They will face capital and liquidity requirements developed alongside other banking regulators.
  • What changes are coming for community banks exploring digital assets?
    Community banks may receive more tailored and less stringent supervision compared with large institutions.
  • Why is regulatory clarity important for crypto investors?
    Clear supervision reduces uncertainty and could support broader institutional adoption of digital assets.

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2026-02-27 04:57