Overview
On April 24, 2025, the Federal Reserve Board ("FRB" or "the Board") announced the withdrawal of guidance it issued during the Biden administration that required FRB-regulated banks to provide advance notification or receive advance permission prior to engaging in certain activities involving digital assets.1 The FRB, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) also withdrew two Joint Statements on risks posed by digital assets to banking organizations that they issued in 2023. In lieu of the withdrawn documents, the Board will consider digital asset activities as part of its regular safety and soundness regulation of state member banks.
This action follows previous, similar actions by the FDIC and the OCC that withdrew requirements that regulated institutions receive permission before engaging in digital asset activities. Although the FRB’s most recent actions parallel those taken by other banking agencies to repeal prior guidance that was widely perceived as constraining banks' engagement with digital asset entities (and those other agencies have, by now, repealed all such guidance), the Fed has not withdrawn its January 27, 2023 policy statement interpreting section 9(13) of the Federal Reserve Act.2 That statement established a rebuttable presumption that the FRB will limit state member banks to engaging as a principal only in activities permissible for national banks.3 It also "reiterated" that "legal permissibility is a necessary, but not sufficient, condition to establish that a state member bank may engage in a particular activity," and provided that state member banks seeking to engage in digital asset activities must have appropriate risk controls in place.4
Rescinded Supervisory Letters
The FRB withdrew two Supervisory Letters: one requiring that banking organizations supervised by the FRB that are seeking to engage in "crypto-asset-related activities" first notify the FRB (the "2022 Supervisory Letter"),5 and another describing a supervisory nonobjection process for state member banks seeking to engage in stablecoin activities (the "2023 Supervisory Letter").6
2022 Supervisory Letter on Digital-Asset-Related Activities
The 2022 Supervisory Letter required FRB-regulated banking organizations to notify their Federal Reserve supervisors prior to engaging in activities such as safekeeping and custody; facilitation of customer purchase and sale of digital assets; lending collateralized by digital assets; and issuance or distribution of stablecoins.7 Although it did not expressly require banking organizations to receive permission from the FRB, it did require them to conduct an initial legal analysis of their proposed activities, and a risk analysis focused on several areas: technology/operational risk; AML/CFT risk; consumer protection and compliance risk; and risks posed to financial stability.8 The advance-notification requirement, situated in a discussion of the potential risks posed by digital assets, probably chilled FRB-regulated organizations' interest in providing digital asset services to customers. We expect that its withdrawal will lead to greater interest in meeting customer need for these types of services.
2023 Supervisory Letter on Stablecoin Activities
The 2023 Supervisory Letter required all state member banks to receive written supervisory nonobjection prior to engaging in stablecoin activities (which the FRB calls "dollar tokens") outlined in OCC Interpretive Letter 1174, including serving as a node in a blockchain network to facilitate payments, issuing a stablecoin, and exchanging a stablecoin for fiat currency.9 The withdrawn letter required state member banks to demonstrate to the FRB (prior to engaging in stablecoin activities) that it had systems in place to identify, measure, monitor, and control operational, cybersecurity, liquidity, AML/CFT, and consumer compliance risks.10 Note that OCC Interpretive Letter 1174, describing stablecoin activities permissible for national banks, has not been withdrawn. However, for FRB state member banks, the FRB’s latest action removes the requirement that they receive written non-objection from the FRB prior to engaging in activities permitted by Interpretive Letter 1174.
Rescinded Joint Statements
The FRB, the FDIC, and the OCC (collectively, the "federal banking agencies") also withdrew two 2023 statements on crypto-asset risks that they issued jointly.11 The first statement, issued in January 2023, discussed crypto-asset risks to banking organizations.12 The second statement, issued in February 2023, discussed liquidity risks to banking organizations from "crypto-asset market vulnerabilities."13
January 2023 Crypto-Asset Risks Statement
The January 2023 statement included a list of general crypto-asset risks identified by the federal banking agencies which they believed banks should be aware of. This list included the risk of fraud, legal uncertainties, misrepresentation, volatility, stablecoin risk, contagion risk from interconnectedness, a "lack of maturity and robustness" in risk management and governance practices, and specific risks from "open, public, and/or decentralized networks."14
The statement included the disclaimer that banks "are neither prohibited nor discouraged from providing banking services to customers of any specific class or type," preempting arguments that this constitutes a form of debanking.15 Nevertheless, the federal banking agencies warned that crypto asset risks that cannot be mitigated must not migrate to the banking system. To that end, the federal banking agencies established a process by which banks would discuss and receive authorization to engage in crypto asset activities—processes which by now have been withdrawn as well. For more information on that withdrawal, see Steptoe's articles here and here.
February 2023 Crypto-Asset Liquidity Risk Statement
The February 2023 statement, which was issued a few weeks after the January 2023 statement, "did not create new risk management principles" and contained the same debanking disclaimer as noted above.16 The statement instead highlighted the liquidity risks of "certain sources of funding from crypto-asset related entities" and offered what it considered "effective practices to manage such risks."17
The statement highlighted liquidity risks from two sources of funding. The first source is deposits placed by a crypto-asset entity for the benefit of the entity's end customers, whose stability might be driven by end customer behavior, rather than by the direct counterparty (i.e., the crypto-asset entity). The stability of those deposits may be influenced by market volatility and sector vulnerabilities. The second source is deposits that make up stablecoin-related reserves, which may be linked to demand, holder confidence, and issuer reserve management principles. The statement warned that both sources may be subject to large and rapid outflows responding to the market, whether due to uncertainties, vulnerabilities, or unexpected market movement.
The statement subsequently listed several "effective risk management practices," though the recommendations were not binding.18 These include: understanding the drivers of deposit behavior; assessing concentration and interconnectedness across crypto deposits; incorporating liquidity risks or funding volatility in contingency funding planning (e.g., in stress testing); and ongoing monitoring and due diligence on the accounts behind such deposits.
Future Action
Although the statements have now been withdrawn, when they were in effect, they did not impose any new binding principles. Any rules which have not been withdrawn are still binding. However, the federal banking agencies have already begun to withdraw some rules, as noted above, and are likely to continue to roll back Biden-era policy statements, guidance, and rules related to crypto assets. The FRB noted that the federal banking agencies are still deciding whether to issue additional guidance,19 while the FDIC noted that the agencies "are exploring issuing additional clarity" with respect to crypto assets "in the coming weeks and months."20
1 Board of Governors of the Federal Reserve System, Press Release, Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities (Apr. 24, 2025) https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250424a.htm.
2 88 Fed. Reg. 7848 (Feb. 7, 2023).
3 Id.
4 Id. at 7849-50.
5 Board of Governors of the Federal Reserve System, Engagement in Crypto-Asset-Related Activities by Federal Reserve-Supervised Banking Organizations, SR 22-6 (Aug. 16, 2022) https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20250424a3.pdf.
6 Board of Governors of the Federal Reserve System, Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens, SR 23-8 (Aug. 8, 2023) https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20250424a4.pdf.
7 Supra n.2 at 2 n.3.
8 Id. at 1-2.
9 Office of the Comptroller of the Currency, OCC Chief Counsel’s Interpretation on National Bank and Federal Savings Association Authority to Use Independent Node Verification Networks and Stablecoins for Payment Activities, at 5-6, IL 1174 (Jan. 4, 2021).
10 Supra n.2 at 3.
11 Board of Governors of the Federal Reserve System, Press Release, Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities, (April 24, 2025) https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250424a.htm.
12 Board of Governors of the Federal Reserve System et al., Joint Statement on Crypto-Asset Risks to Banking Organizations (Jan. 3, 2023), https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20250424a1.pdf.
13 Board of Governors of the Federal Reserve System et al., Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities (Feb. 23, 2023), https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20250424a2.pdf.
14 Supra n.9 at 1.
15 Id. at 2 (emphasis added).
16 Supra n.10 at 1.
17 Id.
18 Id. at 2.
19 Supra n.8.
20 Federal Deposit Insurance Corporation, Press Release, Agencies Withdraw Joint Statements on Crypto-Assets, (April 24, 2025), https://www.fdic.gov/news/press-releases/2025/agencies-withdraw-joint-statements-crypto-assets.
