Fed gives green light: Will Bitcoin benefit?

Fed Turns Green Light: Will Bitcoin Benefit? Fed has turned green light for banks to support cryptoasset and stablecoin activities. However, standard bank supervision will still be applied. Fed has withdrawn previous guidelines warning banks against participating in cryptoassets, stablecoin, and related activities. Innovation in Banking Sector On April 24, the US banking regulatory agency announced this move to "support innovation" in the sector. "These actions ensure the Board's expectations align with emerging risks and support innovation in the banking system." The agency has rescinded two supervisory letters issued in 2022 and 2023. Background Story Previous guidelines, along with other agencies like FDIC and OCC, had warned banks about volatility, liquidation, and legal risks of engaging in cryptoasset and stablecoin activities. Will Bitcoin Benefit? The change and softer stance of Fed on supporting bank cryptoasset activities was welcomed by the industry. In fact, Michael Saylor, Strategy founder (formerly MicroStrategy), viewed this as good for BTC. "Banks are now free to start supporting Bitcoin." Alex Svanevik, CEO of blockchain analysis platform Nansen, noted this update was good news for banks targeting the stablecoin market. "Good news if you want large banks to participate in the stablecoin game, and a sign that regulators are adjusting rather than blocking crypto integration." However, Fed notes that standard bank supervision will still apply to cryptoasset activities. "The Board will no longer require banks to provide notification and will instead supervise banks' cryptoasset activities through normal supervision processes." However, Caitlin Long, Custodian Bank founder, noted that Fed has not yet rescinded an anti-cryptoasset guideline issued in 2023 through a Board vote. She warned that things are not over, but stablecoin law passage could potentially reverse the guideline. Support from Other Agencies In March, OCC first signaled a pro-cryptoasset stance, declaring that banks can process cryptoassets and stablecoins. Subsequently, FDIC investigated the notorious crypto de-banking under the Biden administration. During the Trump administration, the sector enjoyed necessary regulatory relaxation.