James Richardson
The Federal Reserve has officially announced the end of its “novel activities supervision program”, a special oversight initiative introduced in 2023 to closely monitor banks involved in cryptocurrency and fintech-related activities. This move marks a significant policy shift, as the Fed transitions back to its traditional supervisory framework for handling crypto-related banking operations.
The discontinued program was originally designed to provide heightened scrutiny of banks engaging with cryptocurrencies, blockchain, and stablecoins, aiming to address emerging risks in the rapidly evolving digital asset market.
According to the Fed, the decision to sunset the program comes after gaining deeper expertise in how banks manage risks tied to crypto activities. Since its launch, the central bank has improved its understanding of blockchain technology, potential vulnerabilities, and effective risk management strategies within the banking sector.
Integrating Lessons into Traditional Oversight
By ending the specialized supervision, the Federal Reserve will now integrate its acquired knowledge into its regular bank oversight process. This shift is intended to maintain regulatory vigilance while aligning more closely with the broader financial system and the growing crypto and fintech ecosystem.
In its official statement, the Fed emphasized that it is not reducing attention on cryptocurrency risks but instead folding these evaluations into its core supervisory model, ensuring a more streamlined and consistent approach for all banks.
