FDIC Eases Crypto Banking Regulation, Marking a Major Policy Shift
- FDICs FIL-7-2025 permits banks to operate in the crypto space without any prior approval, replacing FIL-16-2022.
- Criticizing restrictive policies, Acting Chairman Travis Hill described them as vague and not promoting innovation in digital assets.
- FDIC urges banks to operate crypto risks corresponding to SEC regulatory measures.
David Sacks, the White Houses cryptocurrency and artificial intelligence director, commended the FDICs latest move, stating that it significantly facilitates banks participation in cryptocurrency activities. He emphasized that allowing banks to engage in crypto-related ventures would help mainstream digital assets, making them more accessible to the broader financial system.
The Federal Deposit Insurance Corporation (FDIC) issued new guidance on March 28, stating that it can engage in crypto-related activities without prior permission as long as safety and soundness standards are met. The announcement, published as Financial Institution Letter (FIL-7-2025), rescinds FIL-16-2022, signaling a significant shift in policy.
Crypto Innovation Gains Regulatory Support
Acting FDIC Chairman Travis Hill highlighted that the agency is moving away from prescriptive policies that were smothering innovation. He noted that the previous approach was unclear, which at times left banks uncertain about regulatory expectations. The FDIC is trying to develop a more formal framework for banks to participate in blockchain and cryptocurrency-related activities.
The agency stated that it will work with the Presidents Working Group on Financial Markets to issue additional guidelines. Bo Hines, Executive Director of the Presidential Working Group on Digital Assets Markets, called the decision a huge step forward toward innovation and adoption. The new stance reflects a broader effort to modernize regulatory policies for financial institutions.
Crypto industry insiders referred to the previous limits as being a component of Operation Chokepoint 2.0, an alleged Biden administration effort to strangle crypto innovation. Hill criticized such efforts as opaque, stating that they discouraged banks from participating in legitimate crypto activities by using non-public enforcement actions.
Future Implications and Industry Concerns
In a January speech, Hill acknowledged that the FDIC had not issued clear public guidance but had engaged in informal interventions. He referred to over 20 instances of banks being asked to halt or slow down digital assets activities without rulemaking or public comment. He called for a reconsideration of financial compliance enforcement across institutions.
Hill also made it clear that Bank Secrecy Act compliance is not to be used as a reason to deny people access to banking services. FDIC internal discussions were said to have focused on allowing banks to follow tokenized deposits and blockchain-based financial infrastructure without unnecessary regulatory hurdles. The step aligns the FDIC with other regulators, such as the SEC, that are developing formal regulatory frameworks.
The FDIC also highlighted that banks must also address risks related to market volatility, cybersecurity, consumer protection, and anti-money laundering. The agency advised institutions to coordinate with their supervisory teams when venturing into crypto-related activities to ensure compliance with regulatory expectations.
The announcement aligns with broader government efforts to promote financial innovation. Not everyone was positive, though. Some predicted economic volatility, and others queried the sudden policy shift. Barring reservations, the FDICs action has the potential to unlock tremendous capital inflows into digital assets as banks revisit their strategy on digital assets.
Read More: FDIC Eases Crypto Regulations, In a Bold Move to Empower Banks
Read more: https://www.tronweekly.com/fdic-eases-crypto-banking-regulation-marking-a/
Text source: TronWeekly
