The Federal Deposit Insurance Corporation (FDIC) has released new instructions permitting banks under its oversight to partake in bitcoin and cryptocurrency activities without needing pre-authorization. This action reverses a contentious policy that was enforced during the Biden administration.
In a declaration issued on March 28, the FDIC stated that banks are now allowed to engage in crypto-related services such as custody and trading if they adequately address the associated risks. The agency will also aim to replace outdated regulations with revised crypto guidance.
The alteration in policy was announced in a new Financial Institution Letter that annuls previous rules from 2022 requiring banks to receive FDIC approval before managing bitcoin and cryptocurrency assets. This bureaucratic hurdle had frustrated the banking sector.
By eliminating this obstacle, the FDIC allows its supervised banks to explore this developing ecosystem with greater freedom. Nevertheless, specific approvals will still depend on interagency collaboration.
Acting FDIC Chairman Travis Hill described the initiative as “one of several measures” in establishing a new crypto-friendly stance that prioritizes security. He remarked, “The FDIC is changing its stance from the flawed methods of the preceding three years.” The agency anticipates providing more guidance as it consults the President’s Working Group on digital assets.
Prominent banks have recently introduced bitcoin and cryptocurrency services despite vague regulations. Offering regulatory clarification will enable more banks to get involved.