The update reflects a recalibration as digital assets move closer to the financial mainstream
The US Federal Reserve has taken a notable step toward easing its stance on digital assets by withdrawing guidance issued in 2023 that restricted how Fed-supervised banks could work with cryptocurrency. The change affects both insured and uninsured banks and signals a shift in how regulators view crypto activity.
🚨🚨🚨WOWZERS–the Fed rescinded guidance it enacted in Jan 2023 simultaneously with the @custodiabank denials + the Biden White House anti-crypto statement. Thank you, VCS Bowman & Gov Waller!🙏 The Fed broke the law by citing this very guidance in the Custodia denial, even tho…
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) December 17, 2025
The original guidance forced uninsured banks to follow the same limits as federally insured institutions. That approach effectively blocked some banks from offering crypto-related services and, in certain cases, prevented them from joining the Federal Reserve system altogether. The Fed now says that framework no longer fits today’s financial landscape.
In a statement, the central bank explained that both the financial system and its understanding of new technologies have changed since the guidance was introduced. Because of that evolution, officials said the policy had become outdated and was no longer appropriate to keep in place.
The move was welcomed by some crypto-friendly banking leaders. Custodia Bank CEO Caitlin Long said the withdrawn guidance played a key role in her bank’s earlier denial for a Federal Reserve master account, which allows institutions to settle payments directly with the central bank. She credited recent leadership changes at the Fed for the shift in tone.
Alongside removing the old rule, the Federal Reserve released new guidance creating a formal path for banks to pursue innovative services, including crypto, as long as they meet risk management and safety standards. Vice Chair for Supervision Michelle Bowman said the goal is to support innovation while keeping the banking system stable.
Not everyone agreed with the decision. Fed Governor Michael Barr voted against the change, warning it could lead to uneven regulation and encourage banks to seek lighter oversight.
