Banks now given more flexibility in handling cryptocurrencies by the FDIC
The Federal Deposit Insurance Corporation (FDIC) has announced a significant shift in its approach towards cryptocurrency activities by banks, allowing financial institutions to engage in certain digital asset activities without requiring prior supervisory approval.
This change marks a departure from earlier policies that mandated advance supervisory approval for crypto activities. On March 28, 2025, the FDIC issued Financial Institutions Letter 7-2025, which rescinded its earlier letter (16-2022) that had established a supervisory non-objection process for state nonmember banks engaging in digital asset activities.
Acting Chairman Travis Hill, who has positioned the FDIC as more amenable to cryptocurrency than under previous leadership, stated that the FDIC is turning the page on the past three years' approach to crypto-related activities. Hill, who took the agency's helm in January, has expressed his belief that there is no place at the FDIC for anyone who has pushed banks to stop serving law-abiding customers.
In a letter last week, Hill delved into the FDIC's plans to stop regulating for reputational risk, particularly as it pertains to digital assets. The FDIC's new guidance rescinds previous guidance, FIL-16-2022, issued under former chair Martin Gruenberg.
Under Hill's leadership, the FDIC is actively working on a new direction on digital assets policy. This new direction involves a more principles-based and risk-focused regulatory approach that encourages bank participation in crypto activities under established safety standards.
The FDIC's new guidance for banks engaging in crypto-related activities can be found in Financial Institution Letter, or FIL-7-2025. In this letter, the FDIC advises FDIC-supervised institutions to consider associated risks such as market and liquidity risk, operational and cybersecurity risks, consumer protection requirements, and anti-money laundering requirements when engaging in crypto-related activities.
The FDIC will continue to work with the President's Working Group on Digital Asset Markets and expects to issue further guidance on banks' crypto-related activities in the future. It's worth noting that the Office of the Comptroller of the Currency issued guidance on cryptocurrency-related activities earlier in March, allowing national banks to engage in certain crypto activities.
The FDIC, along with the Federal Reserve and OCC, issued a joint statement providing guidance on risk management and legal expectations for banks holding crypto-assets for customers on July 14, 2025. This statement emphasizes that banks must independently assess and mitigate legal, operational, technological, and compliance risks associated with crypto-asset safekeeping consistent with safety and soundness principles.
This shift in the FDIC's stance towards cryptocurrency activities by banks is a significant development in the regulatory landscape of digital assets. It signals a more supportive approach from the FDIC towards banks' involvement in the crypto sector, potentially opening up new opportunities for financial institutions and the wider digital asset market.
