Last Friday, the Federal Deposit Insurance Corporation (FDIC) announced the rescission of Financial Institution Letter (FIL-16-2022) and issued new guidance clarifying the process for FDIC-supervised institutions to engage in crypto-related activities. The new Financial Institution Letter (FIL-7-2025) represents a 180 degree turn from the prior Chairman’s position, which required prior notification and relevant information by banks seeking to engage in crypto-related activities.
The new FIL clarifies that institutions may engage in these activities without prior FDIC approval. Institutions are encouraged to engage with their supervisory team as appropriate. They should consider the associated risks, including market and liquidity risk, operational and cybersecurity risks, consumer protection requirements, and anti-money laundering requirements associated with the crypto-related activity.
Background
In our February post, we reported that the FDIC had released 175 documents concerning its supervision of banks engaged in, or seeking to engage in, crypto-related activities. This release was part of Acting Chairman Travis Hill’s commitment to enhancing transparency in the regulatory oversight of cryptocurrency and blockchain technologies. The documents revealed that the FDIC had previously requested numerous financial institutions to pause or refrain from expanding their crypto-related activities, effectively discouraging many banks from pursuing these initiatives.
Subsequently, in our March post, we reported on a related development from the Office of the Comptroller of the Currency (OCC) regarding the issuance of Interpretive Letter 1183 and the rescission of the requirement for OCC-supervised institutions to obtain supervisory nonobjection before engaging in the specified cryptocurrency activities. Previously, OCC-supervised banks had to demonstrate that they had adequate controls in place and receive explicit written non-objection from the OCC to engage in specified activities. The OCC’s recent change was intended to reduce the regulatory burden on banks and encourage responsible innovation in the cryptocurrency space.
New FDIC Guidance
The new FIL clarifies that FDIC-supervised institutions may engage in permissible activities, including activities involving new and emerging technologies such as crypto-assets and digital assets, provided that they adequately manage the associated risks. This change is intended to provide greater clarity and flexibility for banks looking to explore opportunities in the crypto space.
A non-exhaustive list of crypto activities — which is even broader than the enumerated cryptocurrency activities listed in Interpretative Letter 1183 — includes:
- Acting as crypto-asset custodians;
- Maintaining stablecoin reserves;
- Issuing crypto and other digital assets;
- Acting as market makers or exchange or redemption agents;
- Participating in blockchain- and distributed ledger-based settlement or payment systems, including performing node functions; and
- Related activities such as finder activities and lending.
The FIL also notes the FDIC will continue engaging with the President’s Working Group on Digital Asset Markets and it expects to issue further guidance to provide additional clarity regarding banks’ engagement in particular crypto-related activities. Further, it states the FDIC will work with other banking agencies to replace interagency documents related to crypto-assets with further guidance or regulations issued in January 2023 (Joint Statement on Crypto-Asset Risks to Banking Organizations) and February 2023 (Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market Vulnerabilities).
This final point begs the question: to what extent (and by when) may the Federal Reserve Board rescind similar crypto-related policies and guidance?[i] It is possible we may learn more after the expected confirmation of Federal Reserve Governor Bowman as Vice Chair for Supervision.
[i] SR 22-6, “Engagement in Crypto-Asset Related Activities by Federal Reserve-Supervised Banks”; Policy Statement on Section 9(13) of the Federal Reserve Act; SR 23-7; “Creation of a Novel Activities Supervision Program”; SR 23-8, “Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens”.