FDIC Allows Banks to Engage in Crypto Activities Without Prior Approval
New Policy Promotes Innovation
On March 28, 2025, the Federal Deposit Insurance Corporation (FDIC) announced a significant policy change, allowing FDIC-supervised banks to engage in crypto-related activities without requiring prior approval from the agency. This move marks a notable shift in the FDIC’s approach and is intended to facilitate financial innovation while ensuring that banks manage associated risks in accordance with soundness and safety standards.
The FDIC’s announcement was outlined in their Financial Institution Letter (FIL-7-2025), which rescinded the earlier FIL-16-2022. Acting Chairman Travis Hill emphasized the importance of this transition, stating, "With today’s action, the FDIC is turning the page on the flawed approach of the past three years." Hill expressed optimism that this announcement would be a foundational step toward a more progressive framework for banks engaging with crypto and blockchain technologies.
Moving Forward with Collaboration
In conjunction with this new policy, the FDIC plans to continue its cooperation with the President’s Working Group on Financial Markets. The goal is to issue further guidance and to collaborate with other regulatory bodies to replace outdated interagency documents concerning digital assets. Bo Hines, the Executive Director of the Presidential Working Group on Digital Asset Markets, hailed the FDIC’s decision as “a huge step forward toward innovation and adoption.”
Addressing Previous Restrictions
Historically, the FDIC and other regulatory agencies have taken a cautious stance on crypto activities. In recent years, several banks attempting to explore digital asset services received informal “pause” letters, which instructed them to halt all engagement with crypto services. This included activities such as custody arrangements, tokenized deposits, and retail crypto offerings. Critics in the crypto industry referred to these actions as part of "Operation Chokepoint 2.0," alleging that the previous administration sought to restrict the growth of the cryptocurrency sector in the United States.
In his speech earlier this year, Hill criticized these opaque measures for lacking transparency and contributing to an environment that discouraged innovation. He noted the FDIC had issued over 20 letters guiding banks to suspend crypto activities, failing to provide clear public guidance. This led to a call for reevaluation of previous practices and a move toward establishing formal rulemaking processes.
Risk Management and Compliance
Despite the newfound flexibility, the FDIC emphasized that banks must still adhere to risk management practices and comply with the Bank Secrecy Act, which mandates reporting and monitoring to prevent money laundering and financial crimes. This balance is crucial as the agency seeks to encourage innovation while safeguarding the financial system’s integrity.
The FDIC’s policy update represents a thoughtful response to the evolving landscape of digital finance, promoting a more active participation from traditional banks in crypto markets while ensuring that regulatory standards are maintained. As these changes take effect, many in the financial and crypto sectors will be watching closely to see how it impacts the growth and adoption of cryptocurrencies in the mainstream banking system.
Share this article:
