The Federal Reserve has withdrawn its restrictive 2023 policy on “novel activities” and replaced it with a new framework.
The new policy creates a clear pathway for banks to engage in digital-asset and blockchain innovation, marking one of the most significant regulatory pivots in years.
The move, announced on 17 December, reverses the Fed’s prior stance, which had limited state member banks to only those activities explicitly allowed for national banks.
The 2023 policy had served as a de facto barrier to crypto-related services, especially custody, tokenization, and stablecoin integrations. Its withdrawal signals a shift toward enabling responsible digital-asset activity within the U.S. banking system.
Fed removes 2023 restrictions and adopts innovation-friendly standard
Under the new policy statement, the Federal Reserve adopts a “same activity, same risks, same regulation” philosophy — a framework that allows banks to pursue new technologies as long as they demonstrate strong risk management and comply with supervisory expectations.
Vice Chair for Supervision Michelle Bowman described the new guidance as an effort to modernize the banking sector while maintaining safety and soundness.
“New technologies offer efficiencies to banks and improved products and services to bank customers,” Bowman said.
“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.”
The withdrawal of the 2023 guidance also removes the supplementary crypto-specific interpretations that strongly discouraged engagement with digital assets.
That change alone opens the door for supervised banks to revisit cryptocurrency custody, tokenization, blockchain settlement tools, and stablecoin integrations.
Clearer path for both insured and uninsured banks — including crypto-focused institutions
One of the most notable changes is that both insured and uninsured state member banks can now apply to conduct innovative activities, including those not yet permissible for national banks.
This has major implications for Wyoming SPDI-style institutions and trust banks focusing on digital assets.
The Fed states that uninsured banks may engage in a broader range of activities if they demonstrate adequate liquidity, loss-absorbing capacity, and credible resolution mechanisms.
The move follows the recent pilot program by the CFTC, and the OCC’s approval of trust charters for some crypto companies.
What this means for crypto adoption
This policy update does not give banks carte blanche to launch crypto products — but it finally replaces a restrictive framework with a risk-based approval system that encourages experimentation.
Banks seeking to custody crypto, settle tokenized assets, integrate stablecoins, or deploy blockchain rails now have:
- A formal application path
- Clarity on supervisory expectations
- A regulatory environment that no longer assumes such activities are inherently unsafe
It’s a structural shift in tone — from “don’t engage with crypto” to “engage responsibly under supervision.”
Final Thoughts
- The Federal Reserve’s withdrawal of its 2023 policy marks its clearest pro-innovation stance in years, opening the door for bank-led crypto adoption.
- With the CFTC and OCC already advancing digital-asset frameworks, U.S. banking regulators are converging on a strategy that integrates blockchain into mainstream finance.
