FDIC Greenlights Banks’ Crypto Engagement Without Prior Approval, Signaling a Regulatory Shift
Key Takeaways:
- FDIC now allows banks to engage in crypto activities without seeking prior approval, provided they manage associated risks.
- This policy reversal aims to foster innovation while mitigating its associated risks.
- The move marks a significant departure from the previous administrations strict approach.
The Federal Deposit Insurance Corporation (FDIC) issued updated guidance on its supervisory expectations for state-chartered institutions seeking to engage with or interact with the cryptocurrency space. Eligible crypto-related activities can now be performed without any advance FDIC approval, as long as FDIC-supervised institutions effectively mitigate the applicable risk.
A New Path: Shunning the “Flawed Approach”
This move, cemented by Financial Institution Letter (FIL-7-2025), rescinds the earlier FIL-16-2022, which required banks to notify the FDIC of any crypto-ventures prior to doing so. Acting Chairman Travis Hill said that the FDIC is “turning the page on the flawed approach of the last three years” and that additional actions will follow to clarify how banks can safely engage in crypto and blockchain activities. He also emphasized that future regulatory updates will focus on enhancing security measures and ensuring compliance with evolving financial laws, preventing potential misuse of digital assets.
Hill has criticized the FDIC’s previous treatment of crypto, saying the agency sent more than 20 letters to banks asking them to stop or postpone crypto-related activities without any formal rule-making process. Since then, he has advocated for a reassessment of BSA enforcement across financial institutions, emphasizing that compliance with the BSA should not serve as an implicit excuse for restricting banking access.
The OCC All Over Again? A Coalition on Crypto Regulation?
This step aligns with the Office of the Comptroller of the Currency (OCC) — which recently reiterated that national banks and federal savings associations are permitted to conduct crypto-asset custody, stablecoin activities and join independent node verification networks. When the announcement was made, Acting Comptroller of the Currency Rodney E. Hood said OCC expects banks to apply the same risk management controls to crypto as with traditional activity, adding that this shift reduces the regulatory burden on banks engaging in crypto activities.
This change suggests a coordinated effort among regulatory agencies to offer an improved, more streamlined framework for crypto-related activities in the banking sector.
Industry Responds with Relief, Caution
This policy change has been welcomed by those in the industry. Rob Nichols, president and CEO of the American Bankers Association welcomed the new guidance from the FDIC, which permits supervised entities to undertake certain crypto-affiliated business without seeking prior FDIC approval, a notable shift from previous requirements. He further noted that America’s banks were actively seeking to meet the challenge in a safe and responsible manner through the ecosystem of financial services and labeled the regulatory clarity that was necessary to foster that innovation as critical.
Other observers are more cautious. The next financial crash, warned Justin Rosario, could be severe. Likewise, bank adviser Donald F. Billings mocked the policy’s vagueness, suggesting the risk management requirements could be too weak.
De-risking in Crypto through Focused Compliance Continued
The FDIC still wants banks to manage the risks behind crypto with market volatility, liquidity issues, operational and cyber threats, consumer protection requirements, and anti-money laundering (AML) concerns. The agency recommends that institutions work closely with their supervisory teams during the process. This signals that not only is the door open — but that it will come with clear expectations of responsible behavior.
The FDIC’s decision could unlock significant capital in the cryptocurrency sector, as banks reassess whether they can support digital asset firms and provide crypto services. Such a move could help bring digital parts further into the fold of traditional banking, significantly changing the trajectory of finance as we know it.
More News: First-ever Crypto Regulation Roundtable Hosted by SEC: Expect This
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