The U.S. Federal Reserve has officially closed its Novel Activities Supervision Program, which was aimed at overseeing banks’ engagement with cryptocurrency activities. Established in 2023 under Vice Chairman Michael Barr, the program’s purpose was to enhance scrutiny over how banks interacted with digital assets. However, the Fed announced that it has gained sufficient expertise over the past two years to fold these responsibilities back into standard supervisory processes.
In its statement, the Federal Reserve indicated that the initiative was a response to the need for specialized monitoring following the failures of several banks linked to cryptocurrency clients, such as Silicon Valley Bank, Silvergate Bank, and Signature Bank. These incidents prompted increased concerns about the risks posed by innovative financial technologies.
Since the start of the Biden administration, financial regulators, including the Federal Reserve, have shifted towards a less aggressive stance on cryptocurrency oversight. Earlier this year, the Fed retracted guidance that previously required banks to seek approval before engaging in new crypto activities, thus allowing more autonomy in their dealings with digital assets. This trend aligns with similar moves made by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
The decision to dismantle the specialized program reflects the Fed’s belief in its strengthened understanding of the associated risks and management practices within the crypto sector. This transition illustrates the evolving relationship between U.S. banks and cryptocurrency as regulatory approaches continue to adapt.
________
At Crypto Dummies, we strive to demystify the complexities of the cryptocurrency world for enthusiasts of all levels. Through insightful articles, guides, and analysis, we cover topics ranging from blockchain technology to market trends and investment strategies. Stay informed and empowered with Crypto Dummies – your go-to source for accessible crypto knowledge.
