Federal Reserve Ends 2023 Crypto Restrictions for State Member Banks
The U.S. Federal Reserve reverses its 2023 guidance, enabling state banks, including uninsured ones, to engage in approved crypto activities and access payment systems under supervisory standards.
The Federal Reserve has rescinded its 2023 policy limiting crypto activities for uninsured state-chartered banks, granting them a formal path to participate in approved digital asset services under supervisory requirements. The change allows both insured and uninsured Fed-supervised banks to seek membership and access central bank payment systems, potentially reducing friction in crypto custody and settlement. The move reopens possibilities for institutions like Custodia Bank, whose master account application was previously denied. Federal Reserve Governor Michael Barr dissented, citing competitive and regulatory concerns. The revision reflects a shift toward accommodating financial innovation while maintaining safety standards.
- Federal Reserve: The central banking system of the United States, responsible for monetary policy, financial regulation, and stability.
- State Member Bank: A bank that is chartered by a U.S. state and is a member of the Federal Reserve System.
- Fed Master Account: An account at the Federal Reserve giving institutions direct access to payment systems and settlement infrastructure.