The Federal Reserve continues its relaxation of crypto oversight by ending a program created in 2023 to scrutinize fintech and crypto activities by banks
this is a big positive (i.e., Congressional staffers had started disparagingly calling this the “novel activities squashing program.” … Dan McGonegle : The day was always coming when novel banking activities would become core, and the risks and controls would be well-understood. … Forums: r/Hedera : Ħ Federal Reserve Board announces it will sunset its novel activities supervision program and return to monitoring banks' novel activities through the normal supervisory process Ħ
Context & Ripple Effects
The program was introduced in 2023 alongside a more formal approach to banks’ crypto and stablecoin activities. Its closure follows the Fed’s earlier withdrawal of advance-approval guidance for bank crypto activity, shifting the remaining novel-activities review into ordinary supervision.
The move also fits a wider banking-agency reset: the FDIC had said banks could pursue legally permitted crypto activities without prior approval when risks are appropriately managed. The significance is procedural rather than a declaration that every crypto activity is low risk.
First-order effects
- Banks’ fintech and crypto activities will no longer be handled through the Fed’s dedicated 2023 novel-activities program; they return to the normal supervisory process.
- The Federal Reserve removes a distinct oversight channel that had been created amid the 2023 rollout of special crypto-activity supervision.
Second-order effects
- Banks considering crypto-related products face a less exceptional regulatory workflow, but must still satisfy ordinary supervisory expectations and risk controls.
- The change makes the Fed’s posture more consistent with the FDIC’s no-prior-approval approach, reducing one source of agency-specific process friction for federally supervised banks.
Third-order effects
- If this approach persists, crypto activity may increasingly be treated as a standard bank-risk-management question rather than a separate supervisory category.
- That could narrow the crypto legitimacy gap for bank-led offerings, while leaving the durability of the shift dependent on future supervisory priorities and risk outcomes.
The trend: US bank regulators are moving from crypto-specific gatekeeping toward integrating permitted digital-asset activity into conventional prudential supervision.