The Federal Reserve has announced its decision to terminate a supervisory program that was designed to monitor U.S. banks engaged in cryptocurrency services. This move reflects the Fed's now-enlarged understanding of the risks associated with crypto activities and signals a shift in its approach toward regulatory oversight. Under the previous program, banks were required to notify the Fed and adhere to stringent guidelines when offering services like crypto custody or stablecoin transactions. With the program's end, these activities will fall under standard supervisory processes rather than specialized oversight, easing regulatory constraints. The decision also follows a series of regulatory rollbacks, particularly under the Trump administration, which has shifted towards a more favorable stance on digital assets, including rescinding previous restrictions that limited banks' participation in the crypto sector. The Fed's recent changes occur against a backdrop of increasing concern regarding the risks of crypto adoption within the broader financial system, especially after the failures of several banks and the collapse of FTX in 2022.

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