The Federal Reserve has reversed its 2023 restrictions on the crypto industry, bringing crypto-related businesses back under the regular regulatory framework. The regulatory focus has shifted from containment to structured management, with crypto businesses being broken down into regulated modules. This adjustment reflects regulators' acknowledgment of the reality of on-chain dollar flows and a reassessment of systemic risks.
Article author: Conflux
Article source: Mars Finance
"Operation Chokepoint 2.0" has never been a conspiracy theory.
Previously declassified internal documents from the Federal Deposit Insurance Corporation (FDIC) revealed that in 2023, U.S. regulators did indeed launch an organized debanking campaign targeting the crypto industry.
Back then, with the collapses of Silvergate, Signature, and Silicon Valley Bank, regulators used regulatory frictions to restrict banks from providing services to crypto companies, leading to limited liquidity and access in the industry. One of the core tools of this action was a key policy statement from the Federal Reserve that year—classifying banks' involvement in stablecoins, on-chain settlements, and crypto custody as "high-risk innovation activities" and setting additional approval thresholds.
Just yesterday, this blockade was dismantled by the Federal Reserve. Latest news indicates that the Fed has officially rescinded the restrictions imposed in 2023. This isn't a sudden "friendly" shift in regulation, but rather a reflection of the past isolation strategies' inability to cope with the rapidly evolving on-chain fund flows and industry realities.
Initial signs of potential problems
Over the past year, one fact has become increasingly clear:
Stablecoins continue to expand in scale.
On-chain USD settlements are becoming increasingly frequent.
• Funds have not returned to the banking system.
The most important dollar settlement activities are occurring in regions with weaker regulatory reach. This has caused the isolation strategy, originally intended to "mitigate risks," to instead create systemic risks.
It is against this backdrop that the Federal Reserve recently formally withdrew its restrictive policy statement for 2023, bringing banks' involvement in crypto-related businesses back under the regular prudential regulatory framework.
Custodia's Counterattack
A direct consequence of the isolation policies and strangulation measures is that some crypto banks are unable to access the dollar settlement system. Custodia Bank is a prime example. This bank, specializing in crypto custody, applied for a master account with the Federal Reserve for three years but was consistently denied approval, thus being excluded from the dollar clearing system.
Recently, Custodia filed a motion for a full review with the Tenth Circuit Court of Appeals, requesting a reconsideration of the previous ruling that rejected its application for a master account. Although the ruling has not yet been issued, this lawsuit itself has become an important window into the shift in US regulatory logic: the market can use Custodia's case to understand whether regulation is gradually transitioning from "default disapproval" to "compliance-based access."
How should regulation be implemented?
Almost simultaneously, the SEC released a statement regarding broker-dealers holding crypto-asset securities. The document shows that regulators are no longer debating whether to allow it, but rather systematically stipulating:
How to manage private keys
How to assess the risks of blockchain technology?
How to deal with extreme situations such as 51% attacks and hard forks?
Crypto-related businesses are no longer considered "exceptions," but rather regular, regulated risks within the financial system.
Institutional shift
If we look at recent events together, a clear trend emerges:
The Federal Reserve removed special restrictions on cryptocurrencies.
• The SEC provides a managed operations framework
• OCC expands its recognition of stablecoins and custodians
• Regulatory focus shifts from blocking to structured management
The regulatory focus has shifted from blocking to structured management. Encryption is no longer isolated as a whole, but is broken down into regulatory modules: settlement, custody, clearing, and risk control.
Re-enter
In 2023, U.S. regulators chose to "keep encryption out."
In 2025, they realized that the long-term absence was itself the biggest risk.
This is not a victory for one side, but a recognition of reality—when on-chain dollars have become part of global capital flows, the only option for regulators is not to ignore it, but to re-enter it.
The real change will not be reflected in short-term market trends, but rather in who will be allowed to participate in the next phase of the dollar settlement and custody system.
And this is the core significance of this policy adjustment.
*The content of this article is for informational purposes only and does not constitute investment advice. Investing involves risk; please invest cautiously.
