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The Federal Reserve has terminated the special regulatory program for banks regarding crypto assets. What happened?
The Federal Reserve (FED) announced that it will end the "New Activity Supervision Program" that has been in place since August 2023. This program was originally designed for enhanced supervision of banks engaging in encryption assets and distributed ledger technology (DLT) businesses. In the future, these activities will fall under standard banking regulatory processes for review.
Return from Special Regulation to Regular Review
The Federal Reserve (FED) stated in the announcement that the project oversight over the past two years has allowed regulators to gain a deeper understanding of the operational models, risk characteristics, and management practices of banks in the fields of encryption and financial technology.
Therefore, these experiences will be integrated into the daily regulatory framework, and the regulatory letter that initially established the program will be revoked.
The program, launched in 2023, adopts a "risk-oriented" strategy, focusing regulatory efforts on banks that provide deposit, payment, and lending services to encryption asset-related enterprises and fintech companies.
Potential Impact on the Encryption Industry
This policy shift may bring a dual effect to the digital asset industry:
Positive Impact:
The return to regulatory norms may mean that banking activities related to encryption are no longer considered "high-risk experiments."
Expected to improve the channels for exchanges, payment platforms, and blockchain projects to access banking services.
Encourage more traditional banks to explore cooperation opportunities with encryption companies.
Potential risks:
The lack of project-level rigorous review may lead to emerging risks such as DeFi and complex custody solutions being overlooked.
Whether traditional regulatory frameworks can keep up with the innovation speed of the encryption industry remains to be seen.
Changes in Political Background and Regulatory Environment
This move comes against the backdrop of the gradually shifting regulatory environment in the United States towards a more "moderate" stance:
Since the beginning of 2024, the SEC has withdrawn multiple investigations and enforcement actions against encryption companies.
Senior officials from the Ministry of Finance have stated that they will align their policy on national encryption currency reserves with the White House.
Under the Trump administration, the regulatory tone towards digital assets was clearly relaxed.
At the same time, the personnel within the Federal Reserve (FED) is also changing:
Council member Adriana Kugler has resigned on August 8.
Trump has nominated Stephen Miran as the Chairman of the Council of Economic Advisers until January of next year, after which a permanent candidate will be selected.
Why is this an important signal for the encryption market?
The Federal Reserve's decision conveys a key message: encryption currencies and fintech businesses are gradually being incorporated into the "normalization" regulation of the traditional financial system.
This not only potentially enhances the confidence of banks in cooperating with encryption companies, but also signifies that regulatory agencies believe, after two years of project observation, that the risk management of banks in the encryption business has reached an acceptable level.
However, for the rapidly evolving encryption market, this is also a test—whether traditional regulation can promptly capture emerging risks will determine the stability and security of the market in the future.
Conclusion
The Federal Reserve (FED) has terminated the "New Activity Supervision Program", symbolizing a new phase in the United States encryption regulation: returning from "Special Attention" to "Routine Management".
For banks and the encryption industry, this is both an opportunity and a challenge - the key to the future lies in finding a balance between regulatory easing and risk prevention.