The Federal Reserve withdraws its unfavorable banking guidelines on Crypto Assets.

Source: Cointelegraph Original text: "The Federal Reserve withdraws anti-cryptocurrency guidelines for the banking industry"

The Federal Reserve Board of the United States announced that it is withdrawing its previous guidelines aimed at preventing banks from engaging in activities related to cryptocurrencies and stablecoins.

The Board of Governors of the Federal Reserve System stated in a statement on April 24: "The Board is rescinding its 2022 supervisory letter, which set expectations for state member banks to provide advance notice before planning or engaging in activities involving crypto assets."

The statement pointed out that any activities related to cryptocurrency will be supervised through the normal regulatory procedures of the Federal Reserve in the future.

In addition, the Federal Reserve will also revoke its regulatory letter issued in 2023, which affected the way state banks participate in stablecoin activities.

The initial guidance issued by the Federal Reserve pointed out that cryptocurrencies may pose a range of risks, including potential threats to the safety and soundness of the U.S. financial system, consumer protection, and financial stability.

"Certain types of crypto assets, such as stablecoins, could pose risks to financial stability if adopted on a large scale, potentially creating instability by triggering market runs or disrupting payment systems."

At the time, the Fed also emphasized that cryptocurrencies are often used for money laundering and terrorist financing.

The Federal Reserve simultaneously retracted its statement warning banks to be vigilant against cryptocurrency fraudsters.

The Federal Reserve, along with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), has also retracted two statements issued in 2023 that warned banks to be wary of potential fraud risks when interacting with parties in the cryptocurrency space.

The retracted joint statement added: "The release of inaccurate or misleading statements and disclosures by crypto asset companies may constitute unfair, deceptive, or abusive practices, which can cause serious harm to retail and institutional investors."

This withdrawal marks the first significant move by the Federal Reserve regarding cryptocurrency activities during the Trump administration. The administration has taken several measures aimed at making the U.S. more friendly towards cryptocurrencies and supporting related innovations.

Additionally, the U.S. Securities and Exchange Commission (SEC) also rescinded a controversial regulation on January 23. This regulation previously required banks and financial institutions holding crypto assets to record them as liabilities on their balance sheets. The repeal of this measure eliminates regulatory barriers hindering the development of crypto banking, clearing some obstacles for industry growth.

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