Federal Reserve Withdraws 2023 Crypto Policy, Eases Bank Digital Asset Restrictions

The Federal Reserve on December 18 withdrew a restrictive 2023 policy that imposed a "presumption of strong disfavor" on state member banks engaging in crypto activities, replacing it with a more flexible framework, BlockBeats reports. Under the new policy, insured state member banks remain subject to strict limits under Section 24 of the Federal Deposit Insurance Act, while uninsured state member banks can now seek Fed approval case-by-case for certain previously prohibited activities. The Fed said financial markets and supervisors' understanding of innovative products have evolved since 2023, when rules largely prevented banks from holding crypto assets like Bitcoin and Ethereum on balance sheets or issuing stablecoins. The shift follows the Fed's earlier termination of a special crypto bank supervisory program this year and joint digital asset custody guidance released with the OCC and FDIC.