The Federal Reserve has relaxed its cryptocurrency regulatory requirements: withdrawing relevant guidelines and sending new regulatory signals

The Federal Reserve Board announced on April 24 that it will withdraw the regulatory guidance for banks' activities related to crypto assets and US stablecoins, and simultaneously adjust related regulatory expectations. This represents the Federal Reserve's open attitude towards financial innovation and reflects the ongoing evolution of regulators' risk assessment of crypto assets.

Relaxing Regulation: Federal Reserve Withdraws 2022 Crypto Notification Requirements

According to the statement, the Federal Reserve is officially withdrawing the regulatory letter issued in 2022, which previously required state member banks to notify regulators in advance before engaging in crypto asset business. Now, this requirement will no longer apply, and banks will be monitored through existing regulatory processes.

This means that banks wishing to advance or already involved in the cryptocurrency field no longer need to make additional declarations, only complying with routine supervision, thus simplifying the original administrative procedure.

2023 Stablecoin Regulatory Process Also Canceled

The Federal Reserve has also withdrawn the 2023 supervisory nonobjection process for "US dollar token activities". This was originally an assessment process for whether banks could legally participate in US stablecoin projects.

This move means that the Federal Reserve will no longer require banks to obtain a regulatory "non-objection statement" in advance, but will instead incorporate such activities into routine supervision, indicating an increased tolerance for risk in innovative financial instruments like stablecoins.

Joint Action: Three Major Institutions Jointly Withdraw Crypto Statement

This regulatory relaxation is not only led by the Federal Reserve. The Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) announced that they will jointly withdraw two joint statements issued in 2023 with the Office of the Comptroller of the Currency (OCC), which originally imposed restrictions and warnings on banks' involvement in crypto assets and their exposure.

Supporting Innovation: Federal Reserve Releases Regulatory Flexibility

The Federal Reserve emphasized that the purpose of this change is to ensure that regulatory expectations remain consistent with market risk developments while supporting banks' exploration in innovative areas. The statement mentions that they will collaborate with other regulatory agencies to issue new guidelines as needed to support the stable development of emerging financial activities such as crypto assets.

In other words, this does not mean that the Federal Reserve is completely letting go of regulation, but rather choosing a more flexible and industry-aligned approach to address the rise of crypto assets.

Relaxation Does Not Mean Leniency, Crypto Finance Still Receives Attention

Although these measures are seen as regulatory relaxation, they actually demonstrate that regulators are adjusting their strategy, shifting from "report first, then execute" to "continuous supervision, flexible response". Between innovation and risk, the Federal Reserve is trying to find a balanced path.

For the banking industry, this will provide more flexibility in engaging with crypto and stablecoins; for the crypto industry, it is another potential positive policy signal.