The Federal Reserve has concluded its supervisory program designed to oversee banks offering cryptocurrency services. Previously, the program required U.S. banks involved in crypto and fintech to inform the Fed and comply with strict guidelines. However, the Fed now believes it has developed a sufficient understanding of the associated risks and will shift monitoring of novel activities such as crypto asset custody to the standard supervisory processes. This decision follows broader regulatory changes under President Trump, resulting in reduced scrutiny compared to previous administrations. The Fed's program originally aimed to mitigate risks linked to innovations in crypto, particularly after the collapse of exchange FTX in 2022 and failures of certain crypto-friendly banks in 2023. This shift in policy comes alongside an executive order from Trump targeting debanking practices against the crypto industry and signals a more supportive approach to digital assets from regulators. This move indicates a sweeping change in the regulatory landscape for banks and their engagement with cryptocurrency activities.

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