The Federal Reserve Board issued a statement on April 24, Thursday, announcing it had rescinded two supervisory letters, one issued in 2022 and another in 2023, that required state member banks to notify the Fed in advance before engaging in crypto-asset or dollar token-related activities.
Under the new framework, banks will no longer be obligated to submit such notifications and will instead have their crypto activities reviewed during routine supervisory examinations.
Moreover, the Fed, in coordination with the Federal Deposit Insurance Corp (FDIC), has withdrawn two joint statements from 2023 regarding crypto-asset activities and exposures, initially released in conjunction with the Office of the Comptroller of the Currency (OCC).
Financial regulators walk away from Biden-era crypto legislations
The Fed Board of Governors now joins the FDIC and OCC in easing laws that were imposed by the previous administration, which discouraged banks from offering crypto services to their clientele.
“The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate,” the Fed said in its statement.
On April 7, the FDIC removed a notice requirement that compelled banks it supervised to inform the agency before launching crypto-related services.
The now-rescinded guidance had required notification for several digital asset activities, including acting as custodians for crypto, holding stablecoin reserves, issuing digital assets, and using blockchain-based payment systems. The FDIC’s new position permits these activities without prior notice, provided they are deemed “permissible.”
“Crypto-related activities not on the “permissible” list today may be added to that list in the future, and we will continue to monitor for further crypto-related developments in the banking sector,” the regulator wrote.
The FDIC’s updated guidance refers to earlier OCC interpretations that define what constitutes permissible crypto-related banking activities. Acting Chairman Travis Hill noted in an April 8 speech that the FDIC could also issue further guidance on public, permissionless blockchains, stablecoin usage, and tokenized bank deposits.
The financial watchdog reiterated that banks must carry out crypto-related activities in a “safe and sound manner.”
“Banks should consider the risks of crypto-related activities such as “market and liquidity risk; operational and cybersecurity risks; consumer protection requirements, and anti-money laundering requirements,” it explained.
El Salvador and SEC join forces in cross-border crypto regulation
In other news, El Salvador is proposing an international regulatory partnership with the US Securities and Exchange Commission (SEC) to help regulate digital assets more clearly.
According to several news outlets, the Central American nation’s Comisión Nacional de Activos Digitales (CNAD), El Salvador’s primary crypto regulator, could establish a cross-border regulatory sandbox in partnership with the SEC’s Crypto Task Force.
“Our biggest message is that digital assets don’t have any geographical barriers,” Juan Carlos Reyes, president of the CNAD, said in an April 22 press conference. “Collaboration with regulators should not have international barriers either.”
This regulatory blank slate attracted foreign financial institutions like Binance, Bitfinex, and Tether, which have since expanded operations into the country.
Under the proposal discussed with SEC officials on April 22, the CNAD listed several pilot scenarios, including a US financial broker acquiring a digital asset license through CNAD and two small-scale tokenization projects capped at $10,000 each.
“The quality of people that make up the SEC Crypto Task Force is quite impressive. They get it. They understand the technology. We were able to have discussions that were on point about what’s needed in order to regulate the technology… It was very refreshing,” Reyes told reporters.
The initiative has garnered support from American legal professionals working with the CNAD. Erica Perkin, an advisory group member and founder of The Perkin Law Firm, noted that the CNAD’s framework could provide valuable insights to the SEC. “We’ve built a framework that’s nimble enough to work on the exact issues that the SEC is looking at,” Perkin denoted.
Cryptopolitan Academy: Coming Soon – A New Way to Earn Passive Income with DeFi in 2025. Learn More
