The Federal Reserve ends its targeted crypto oversight program, signaling a shift in how the central bank supervises digital asset activities within U.S. banks. This program, originally established to monitor novel risks associated with cryptocurrencies and fintech operations, has been formally retired, and oversight will now occur through standard supervisory frameworks. While the change does not remove regulatory requirements, it reduces the special scrutiny previously applied to banks engaging in crypto services.
This decision reflects the Federal Reserve’s assessment that it now has sufficient expertise to evaluate crypto-related risks under existing examination processes. By ending the targeted program, banks and the broader digital asset industry can expect more predictable supervision, while regulators maintain their focus on risk management, financial stability, and compliance standards. The move is significant for institutions navigating crypto services, offering clarity without diminishing accountability.
What Does It Mean That the Federal Reserve Ended Its Targeted Crypto Oversight Program
The Federal Reserve ending its targeted crypto oversight program means crypto-related bank activities are no longer supervised under a special, separate framework.
Oversight now happens through the same supervisory processes used for other banking activities.
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The change removes a crypto-specific supervisory layer
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Crypto activities are still regulated, just not singled out
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Standard safety and soundness expectations remain in place
Definition of the targeted crypto oversight program
The targeted crypto oversight program was a specialized supervisory initiative focused on banks’ crypto and fintech activities.
It was designed to monitor novel risks tied to digital assets.
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Applied only to banks engaging in crypto-related activities
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Focused on heightened review and early-stage risk detection
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Operated alongside normal bank examinations
Timeline of when the program was introduced and ended
The program was introduced in 2023 and formally ended in 2025.
The Federal Reserve rescinded the supervisory guidance that created it.
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Launched after increased concern over crypto-related bank risks
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Used during a period of market instability
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Ended once regulators assessed oversight maturity had improved
Scope of activities the program originally covered
The program covered crypto and distributed ledger activities conducted by supervised banks.
It focused on areas viewed as higher risk or less established.
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Crypto custody and safekeeping services
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Stablecoin-related activities
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Blockchain-based payment and settlement systems
How the Federal Reserve’s Crypto Oversight Program Worked
The program worked by applying enhanced supervisory attention to crypto activities outside normal exams.
It relied on targeted reviews rather than routine inspection cycles.
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Separate monitoring streams
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More frequent supervisory engagement
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Early intervention when risks emerged
Supervisory processes used under the targeted program
Supervision relied on specialized reviews rather than standard exam timing.
Banks were evaluated based on activity-specific risk profiles.
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Dedicated supervisory teams
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Ongoing dialogue with bank management
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Focus on governance and controls
How crypto and fintech activities were reviewed
Crypto and fintech activities were reviewed as novel and higher-risk operations.
Examiners emphasized risk identification over historical performance.
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Forward-looking risk assessments
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Scenario analysis and stress considerations
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Emphasis on operational resilience
Differences from standard bank supervision
The program differed by isolating crypto activities from routine bank oversight.
Standard supervision evaluates all activities together.
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Separate review tracks
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Higher scrutiny thresholds
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Less reliance on established supervisory precedents
Why the Federal Reserve Ended Its Targeted Crypto Oversight Program
The Federal Reserve ended the program after determining standard supervision could address crypto risks effectively.
Officials cited increased regulatory experience and clearer expectations.
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Oversight tools became more mature
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Crypto risks were better understood
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Separate treatment was no longer necessary
Official reasons cited by the Federal Reserve
The Fed stated it now has sufficient insight to supervise crypto activities through normal processes.
The change reflects confidence in existing supervisory frameworks.
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Improved examiner expertise
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Clearer industry practices
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Established risk management expectations
Regulatory and political context behind the decision
The decision occurred amid broader debate over regulatory overreach and innovation limits.
Crypto oversight had become a policy flashpoint.
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Lawmaker scrutiny of specialized supervision
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Concerns over debanking
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Pressure to normalize crypto regulation
Industry pressure and policy reassessment factors
Banks and industry groups argued the program created unnecessary friction.
The Fed reassessed whether special treatment remained justified.
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Higher compliance costs
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Slower product approvals
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Competitive disadvantages
What Replaced the Targeted Crypto Oversight Program
The targeted program was replaced by standard supervisory frameworks.
Crypto activities are now reviewed alongside other banking operations.
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No crypto-only supervisory channel
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Same exam cycles as other activities
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Consistent risk-based supervision
Return to standard supervisory frameworks
Banks are now supervised under routine safety and soundness examinations.
Crypto risks are assessed as part of overall risk profiles.
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Integrated risk reviews
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Normal exam scheduling
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Established supervisory methods
How crypto activities are evaluated under normal bank exams
Crypto activities are evaluated based on risk, controls, and compliance outcomes.
They are no longer treated as exceptional by default.
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Governance and board oversight
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Financial and operational risk controls
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Compliance with applicable laws
Ongoing expectations for risk management
Risk management expectations remain high despite the program’s end.
Banks must demonstrate effective controls.
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Clear risk ownership
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Documented policies
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Ongoing monitoring
Roles and Responsibilities After the Program’s End
Responsibilities are now more evenly distributed between banks and examiners.
No special supervisory carve-outs exist.
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Banks manage crypto risk internally
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Examiners assess outcomes, not labels
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Coordination continues across agencies
Responsibilities of banks engaging in crypto activities
Banks remain fully responsible for managing crypto-related risks.
Ending the program does not reduce accountability.
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Strong governance structures
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Effective compliance programs
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Ongoing risk assessments
Role of Federal Reserve examiners going forward
Examiners assess crypto activities as part of normal bank operations.
Focus remains on safety, soundness, and consumer protection.
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Risk-based evaluations
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Consistent supervisory standards
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Escalation when issues arise
Coordination with other U.S. regulators
The Fed continues coordinating with other federal regulators.
Oversight remains multi-agency.
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SEC for securities-related issues
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FDIC for deposit and resolution concerns
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Shared supervisory intelligence
Why This Decision Matters for the U.S. Financial System
The decision signals a shift toward normalized crypto oversight within banking.
It reflects regulatory stabilization.
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Reduced fragmentation
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Clearer expectations
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Greater consistency
Impact on financial stability oversight
Financial stability oversight remains unchanged in its core objectives.
Crypto risks are addressed within existing frameworks.
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Systemic risk monitoring
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Capital and liquidity standards
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Operational resilience checks
Signals about the Federal Reserve’s regulatory posture
The move suggests a more measured and less reactive stance.
The Fed is signaling confidence in its supervisory tools.
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Less experimentation
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More consistency
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Predictable supervision
Broader implications for innovation and risk balance
The change may lower barriers while maintaining controls.
Innovation is not prioritized over safety.
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Balanced risk approach
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Clearer pathways for development
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Reduced uncertainty
Benefits for Banks and Financial Institutions
Banks gain clearer and more predictable oversight.
Supervision becomes easier to plan around.
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Fewer overlapping reviews
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Lower compliance complexity
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Improved operational planning
Reduced regulatory complexity
Removing a special program simplifies supervisory engagement.
Banks interact through one primary oversight channel.
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Fewer reporting layers
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Clearer examiner expectations
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Streamlined governance
Increased clarity for crypto-related services
Banks can better assess what is permissible.
Rules are applied consistently.
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Clear compliance benchmarks
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Predictable supervisory responses
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Better internal decision-making
Potential expansion of permissible activities
Some banks may reassess previously paused initiatives.
Risk appetite decisions become clearer.
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Custody services
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Payments infrastructure
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Tokenized assets
Implications for the Crypto and Digital Asset Industry
The crypto industry gains improved access to regulated banking services.
Barriers tied to special oversight are reduced.
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Easier bank partnerships
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Improved infrastructure access
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Greater legitimacy
Changes in Bank Crypto Partnerships
Banks may reengage with crypto firms more confidently.
Supervisory uncertainty is lower.
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More service offerings
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Clearer onboarding processes
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Reduced compliance friction
Effects on custody, payments, and stablecoins
Core crypto services may see gradual expansion.
Banks can evaluate risks under standard frameworks.
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Institutional custody growth
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Blockchain-based payments
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Stablecoin infrastructure support
Market confidence and institutional participation
Normalized oversight can improve institutional confidence.
Regulatory predictability matters to large players.
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Increased participation
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Long-term investment planning
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Reduced regulatory shock risk
Compliance Expectations Despite the End of Targeted Oversight
Compliance obligations remain fully in force.
Ending the program does not weaken legal requirements.
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Existing laws apply
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Enforcement authority remains
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Supervisory accountability continues
Existing laws and regulations that still apply
Banks must comply with all applicable financial laws.
Crypto activities receive no exemptions.
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Bank Secrecy Act
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Anti-money laundering rules
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Consumer protection laws
Risk management and internal controls requirements
Strong internal controls are still expected.
Crypto activities must meet the same standards as others.
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Board oversight
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Internal audits
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Control testing
Reporting and supervisory review obligations
Reporting duties remain unchanged.
Supervisors can still request detailed information.
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Activity disclosures
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Risk reporting
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Incident notifications
Common Risks and Misinterpretations of the Policy Change
The biggest risk is assuming crypto oversight no longer exists.
That assumption is incorrect.
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Oversight continues
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Enforcement authority remains
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Expectations stay high
Misconception that crypto oversight has ended entirely
Crypto activities are still regulated within banks.
Only the specialized program ended.
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No regulatory vacuum
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No reduced scrutiny by default
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No exemption from supervision
Operational and compliance risks for banks
Banks face risk if they relax controls prematurely.
Supervisors will still assess outcomes.
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Weak governance
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Inadequate controls
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Poor documentation
Regulatory uncertainty and enforcement exposure
Misreading the change can increase enforcement risk.
Assumptions may not align with examiner views.
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Inconsistent interpretations
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Policy gaps
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Reactive compliance fixes
Tools and Frameworks Banks Use to Manage Crypto Risk
Banks rely on established governance and risk frameworks.
Crypto activities fit within existing systems.
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Enterprise risk management
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Compliance monitoring
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Vendor oversight
Governance and compliance systems
Governance frameworks set accountability and controls.
Crypto activities require clear ownership.
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Board-approved policies
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Management oversight
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Compliance escalation paths
Risk assessment and monitoring tools
Risk tools track exposure and performance.
Crypto risks are measured like others.
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Risk scoring models
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Ongoing monitoring dashboards
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Incident tracking
Third-party and vendor oversight mechanisms
Vendor risk management is critical for crypto services.
Many activities rely on external providers.
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Due diligence reviews
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Contractual controls
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Ongoing monitoring
Actionable Checklist for Banks After the Program Ends
Banks should reassess crypto activities under standard supervision.
A structured review reduces risk.
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Inventory activities
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Align controls
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Prepare for exams
Reviewing existing crypto activities
Banks should identify all crypto-related operations.
Visibility comes first.
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Custody services
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Technology partnerships
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Payment solutions
Aligning policies with standard supervision
Policies should reflect normal supervisory expectations.
Crypto should not sit outside core governance.
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Update risk policies
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Integrate compliance controls
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Train staff
Preparing for future regulatory changes
Regulatory conditions can change quickly.
Prepared banks adapt faster.
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Monitor guidance
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Maintain flexibility
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Document decisions
How the Federal Reserve’s Approach Compares to Other Regulators
The Fed’s approach aligns more closely with peer regulators after the change.
Crypto is treated as part of broader financial oversight.
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Less fragmentation
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More coordination
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Clearer roles
Comparison with SEC and FDIC oversight
Each regulator focuses on its statutory mandate.
Overlap remains but roles are clearer.
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SEC handles securities issues
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FDIC focuses on depositor protection
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Fed emphasizes bank safety
Differences between U.S. and international crypto supervision
International regulators vary widely in approach.
The U.S. favors risk-based supervision.
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EU uses formal crypto frameworks
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Some jurisdictions impose licensing regimes
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Others restrict bank involvement
Regulatory consistency and gaps
Consistency has improved, but gaps remain.
Coordination continues to evolve.
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Overlapping authority
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Emerging asset classes
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Cross-border issues
FAQs
Does the Federal Reserve ends its targeted crypto oversight program mean crypto is no longer regulated?
No. Crypto activities within banks are still subject to regulation under standard supervisory frameworks. The program’s end does not remove compliance obligations or oversight authority.
How will banks offering crypto services be affected by the program ending?
Banks now face oversight through normal examination processes, which simplifies supervisory engagement but maintains full risk management expectations.
Could the Federal Reserve reintroduce a specialized crypto oversight program in the future?
Yes. If new risks emerge or market conditions change, the Fed has the authority to establish targeted supervision again.
What steps should institutions take to prepare for post-program oversight?
Banks should review crypto activities, update policies to align with standard supervision, and ensure robust risk management and compliance controls are in place.
How does ending the targeted program impact the broader crypto and digital asset industry?
The industry may experience clearer access to regulated banking services, more predictable oversight, and opportunities for expanded bank–crypto partnerships.
