Federal Reserve Withdraws 2023 Crypto Guidance for Banks

Key Highlights

• The U.S. Federal Reserve has withdrawn its 2023 guidance that effectively blocked uninsured banks from becoming Fed members and engaging in crypto. 

• This announcement comes after recent developments, like the FDIC and OCC withdrawing earlier joint statements that had warned banks about the danger of cryptocurrency.
• This development will boost the integration of cryptocurrency in traditional finance

On December 17, the United States Federal Reserve made another major decision that could open the door for the nation’s banks to embrace cryptocurrencies. 

According to the latest announcement, the Federal Reserve Board has withdrawn restrictive guidance from 2023 and issued a new statement to encourage “responsible innovation” for the banks it supervises. 

Vice Chair for Supervision Michelle W. Bowman stated in the press release, “New technologies offer efficiencies to banks and improved products and services to bank customers. By creating a pathway for responsible, innovative products and services, the Board is helping ensure that the banking sector remains safe and sound while also modern, efficient, and effective.”

This withdrawal of guidance from 2023 will eliminate the major hurdles that had previously limited how banks could interact with digital assets like Bitcoin and stablecoins. 

The old 2023 policy had been used to deny some institutions, mainly the crypto-focused Custodian Bank, access to the Federal Reserve’s payment systems. 

Federal Agencies’ Coordinated Effort for Crypto Integration

The Federal Reserve is working alongside the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) to withdraw earlier joint statements that had warned banks about the danger of cryptocurrency.

“The withdrawn joint statements, which were issued on January 3, 2023 and February 23, 2023, addressed crypto-asset risks and liquidity risks to banking organizations resulting from crypto-asset market vulnerabilities,” stated in the earlier press release.

These statements and withdrawals of previously issued policies show that regulators now believe that the cryptocurrency market has matured and bank risk management has improved enough to support a more open stance. 

Apart from this, the Commodity Futures Trading Commission (CFTC) under the chairmanship of Acting Chair Caroline D. Pham is also working continuously to bring regulatory clarity for the cryptocurrency sector and help it to integrate into the traditional financial world. 

The CFTC recently withdrew outdated rules and launched a pilot program that allows major digital assets like Bitcoin, Ether, and USDC to be used as collateral in derivatives trading.

After being elected to a second term, U.S. President Donald Trump has formed a Working Group on Digital Asset Markets to fulfill his promise to make America the cryptocurrency capital of the world. 

This group helped the government to approve the GENIUS Act in July 2025, the nation’s first federal law, which provided a clear framework for stablecoins. Under this new direction, banking regulators have been instructed to permit activities explicitly, including crypto custody and acting as intermediaries for crypto trades. 

With the new regulatory clarity, U.S. major traditional banks are moving aggressively to enter the cryptocurrency market. Major institutions, including Bank of America and JPMorgan Chas,e are reportedly preparing to launch new services like crypto trading desks and digital asset custody for their clients.

This will allow them to compete directly with established crypto-native companies like Coinbase. The new rules will encourage innovation in areas like blockchain-based payments and the tokenization of real-world assets, such as converting U.S. Treasury bonds into digital tokens that can be traded more efficiently.

Also Read: CFTC Acting Chair Caroline Pham to Join MoonPay as CLAO: Report