The Federal Reserve has rescinded its 2023 policy limiting crypto activities for uninsured state-chartered banks, granting them a formal path to participate in approved digital asset services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.