The Federal Deposit Insurance Corporation has torn up its restrictive crypto playbook. Acting Chairman Travis Hill announced the agency is “turning the page” on its previous approach, scrapping the Biden-era requirement that banks notify regulators before engaging in crypto activities. The policy reversal ends a regime that effectively kept traditional banks on the sidelines of the crypto revolution.
Gone is FIL-16-2022, the guidance that had banks jumping through hoops just to touch anything blockchain-related. Now? Banks can plunge into crypto without asking for permission first. What a concept.
The change aligns the FDIC with the Office of the Comptroller of the Currency’s recent moves, creating a more unified regulatory front. It’s part of the Trump administration’s broader push to roll back restrictions on digital assets. Banks that had their crypto ambitions crushed by regulatory red tape are breathing collective sighs of relief. Unlike traditional DEX platforms, banks will need to maintain KYC requirements even while engaging in crypto activities.
Finally, a united front as regulators remove the crypto handcuffs from traditional banks—just what the industry needed.
The scope of permissible activities is surprisingly broad. Crypto custody, stablecoin reserves, digital asset issuance, market making, exchange services—they’re all on the table now. Even blockchain-based settlement systems and related lending activities got the green light.
Let’s be real though—this isn’t a free-for-all. Banks still need to manage risks. Cybersecurity concerns, market volatility, liquidity challenges—they’re all still there, lurking behind the crypto opportunity. The FDIC expects “safe and sound practices” in all activities. Translation: Don’t mess this up.
The banking industry is practically giddy. ABA President Rob Nichols called it “an important step” for innovation. No kidding. After years of 25 “pause” letters sent to 24 institutions and mountains of regulatory resistance, banks finally have room to experiment. Coinbase’s extensive lobbying efforts have finally paid off as the largest U.S. crypto exchange pushed for these regulatory changes. As crypto activity increases, investors should remain vigilant and seek guidance from blockchain-certified auditors if they suspect fraudulent schemes.
Future guidance is still coming. The FDIC plans to work with other agencies on interagency approaches to specific crypto activities. But for now, the message is clear: The crypto door is open. Banks can walk through it. Whether that leads to riches or ruin remains to be seen.
