FDIC and CFTC Ease Crypto Regulations for Banks

By: Eliza Bennet

The Federal Deposit Insurance Corporation (FDIC) has issued new guidance allowing FDIC-supervised banks to engage in cryptocurrency activities without prior approval, provided they adhere to safety and soundness standards. This significant policy shift, marked by the rescinding of previous guidelines requiring prior notification to the agency, underscores a transformative approach towards embracing digital finance. This change was announced in the FDIC’s Financial Institution Letter (FIL-7-2025).

Acting FDIC Chairman Travis Hill emphasized the importance of this change, stating that it marks a departure from the previous flawed regulatory stance and works towards fostering innovation and adoption within the financial sector. This move aligns the FDIC's approach with that of other regulatory bodies like the US Securities and Exchange Commission (SEC), which has been working to establish clear frameworks for crypto regulation. Meanwhile, the Commodity Futures Trading Commission (CFTC) also announced that digital asset derivatives would be treated like any other derivatives, eliminating additional scrutiny solely on account of their digital nature.

This regulatory easing follows the FDIC’s decision to remove the ‘reputational risk’ category from its bank examinations, effectively allowing more room for financial institutions to operate in the crypto space. The FDIC urges banks to be mindful of related risks including market, liquidity, cybersecurity, consumer protection, and compliance with Anti-Money Laundering (AML) standards when engaging in these activities. This aligns with the broader intention of the FDIC to reset its strategies concerning financial innovation and is expected to be a precursor to further steps toward clear and consistent regulatory guidelines for crypto-related services.

These developments follow an era where banks received informal warnings to halt digital currency activities, amid reasonings for Operation Chokepoint 2.0 under Joe Biden's administration. These letters, criticized for their lack of transparency, contributed to a perception of discouragement towards financial innovation. This revision in guidance not only promotes legal clarity for banks but also supports industry-wide calls for a defined roadmap for lawful crypto services.