US Crypto Banking Restrictions Lifted in 2025: What the New Rules Mean

US Crypto Banking Restrictions Lifted in 2025: What the New Rules Mean
Michael James 23 February 2025 19 Comments

Crypto Banking Regulation Timeline

Key Regulatory Changes in 2025
March 7, 2025

OCC: Issued Interpretive Letter 1183, rescinding IL 1179
National banks can now custody crypto and hold stablecoins without a separate non-objection request.

March 28, 2025

FDIC: Cancelled FIL-16-2022 notification requirement
FDIC-supervised institutions may engage in permissible crypto activities after normal risk-management review.

April 24, 2025

Federal Reserve: Rescinded Supervisory Letters SR 22-6 and SR 23-8
State-member banks and holding companies no longer need advance notice or formal approval for most crypto-asset services.

Impact Summary

Compliance Benefits: Removed regulatory hurdles that previously required advance approvals and lengthy processes.

Market Impact: Enables traditional banks to compete with crypto-fintech firms and reduces compliance costs.

Future Outlook: Regulatory clarity continues with ongoing guidance from the President's Working Group.

On April 24, 2025, the United States took a dramatic step toward normalizing digital‑asset services in traditional finance. The Federal Reserve announced that it was withdrawing the two supervisory letters that had forced banks to ask for prior approval before touching crypto‑assets. That move, echoed by the OCC and the FDIC, effectively ends the era of heavy‑handed crypto banking restrictions that haunted banks for three years.

Why the Cut‑Back Matters

Before the April decision, banks faced a maze of notifications, non‑objection requests, and joint‑statement compliance checks. The rules created a chilling effect: many regional and community banks stayed out of the crypto market altogether, fearing long approval timelines and costly compliance programs. Removing those barriers does three things:

  • It cuts compliance costs, freeing up staff to focus on product development rather than paperwork.
  • It levels the playing field, letting traditional banks compete with pure‑play crypto‑fintech firms.
  • It signals to investors that the federal government now trusts its own supervisory staff to understand digital assets.

Timeline of the Regulatory Rollback

Key Dates and Actions in the 2025 Crypto Banking Shift
Date Regulator Action Taken Impact on Banks
March 7, 2025 Office of the Comptroller of the Currency (OCC) Issued Interpretive Letter 1183, rescinding IL 1179 National banks can now custody crypto and hold stablecoins without a separate non‑objection request.
March 28, 2025 Federal Deposit Insurance Corporation (FDIC) Cancelled FIL‑16‑2022 notification requirement FDIC‑supervised institutions may engage in permissible crypto activities after normal risk‑management review.
April 24, 2025 Federal Reserve Board Rescinded Supervisory Letters SR 22‑6 and SR 23‑8 State‑member banks and holding companies no longer need advance notice or formal approval for most crypto‑asset services.

The Letters That Got Pulled

SR 22‑6 (2022) demanded that state‑member banks send the Fed a heads‑up before starting any crypto‑related activity. SR 23‑8 (2023) added a formal “non‑objection” step, turning every new token service into a mini‑regulatory filing. Together they created a two‑step gate that many banks simply could not clear. With those gone, the path to offering crypto custody, stablecoin deposits, or even participating in independent node verification networks becomes a standard product‑development decision rather than a regulatory hurdle.

Animated regulatory letters break golden chains, releasing pink petals and butterflies over a city skyline.

What Banks Can Do Now

The new landscape gives banks three clear buckets of permissible activity:

  1. Crypto Custody: Hold customers’ private keys for Bitcoin, Ethereum, or other major tokens, provided the bank has robust cyber‑risk controls.
  2. Stablecoin Services: Accept, hold, or issue stablecoins that are fully backed by fiat reserves, mirroring traditional deposit accounts.
  3. Node Participation: Join independent verification networks (like those under the President's Working Group on Digital Asset Markets) to support blockchain consensus without needing special approval.

All activities remain subject to existing safety‑and‑soundness rules, consumer‑protection statutes, and anti‑money‑laundering (AML) obligations. In practice, that means banks will continue to file regular risk‑assessment reports, but they won’t have to submit separate “crypto‑specific” applications.

Industry Reaction: A Wave of Optimism

Legal firms and industry analysts have praised the coordination. Jones Day called the Fed’s move a “softening of stance” that follows the OCC’s lead. The Fintech Law Blog described the shift as a “permissive stance” that eliminates the “regulatory uncertainty” that had stalled many projects. Latham & Watkins highlighted that the OCC’s reaffirmation of crypto‑custody and stablecoin reserve‑holding “represents a clear departure from the restrictive interpretations of the previous administration.”

From a practical standpoint, banks are already drafting product roadmaps. Early‑stage pilots at a handful of regional banks indicate they plan to launch crypto‑wallet services by Q1 2026, and a few larger institutions have announced intentions to offer stablecoin‑linked checking accounts.

What Still Remains Unclear

Even with the big letters gone, regulators left several gray zones:

  • Holding non‑stablecoin crypto assets on the balance sheet - the guidance still treats those as high‑risk.
  • Crypto‑asset lending - no explicit permission or prohibition, meaning banks must tread carefully.
  • Cross‑border crypto services - the Fed’s statement focused on dollar‑denominated tokens; foreign‑currency crypto may still face separate scrutiny.

All three agencies said they will keep working with the President’s Working Group to flesh out additional guidance. Expect follow‑up releases in late 2025 or early 2026 that address these gaps.

Bank team launches crypto custody service, with holographic tokens and glowing coins swirling in a pastel office.

Steps for Banks Ready to Jump In

For a bank that wants to act now, a practical six‑step checklist can keep the rollout smooth:

  1. Risk Assessment: Map out crypto‑related risks (cyber, market, compliance) and compare them to existing risk‑management frameworks.
  2. Policy Update: Amend internal policies to reference the new supervisory guidance and remove any legacy “notification” clauses.
  3. Technology Stack: Choose a custody provider or develop in‑house key‑management tools that meet federal cybersecurity standards.
  4. Staff Training: Ensure compliance, AML, and front‑office teams understand the new product rules and reporting obligations.
  5. Pilot Launch: Start with a limited customer segment (e.g., high‑net‑worth clients) to test operational flows.
  6. Regulatory Review: File the standard supervisory report that now includes a crypto‑risk section, but no separate non‑objection request.

Following this pathway lets banks move quickly while staying within the “normal supervisory processes” that the Fed now emphasizes.

Looking Ahead: A More Integrated Financial System?

Analysts are already speculating about the broader impact. If traditional banks capture even a modest share of the crypto‑custody market, the total addressable market could add $50‑$70billion in assets under management by 2028. That influx would bring more institutional discipline to the crypto ecosystem and could push stablecoins toward wider acceptance as a “digital dollar.” At the same time, the regulatory vacuum around crypto‑lending could spark a new wave of fintech‑bank partnerships, where banks provide the back‑office compliance while fintechs handle the front‑end user experience.

In short, the 2025 rollback doesn’t just remove paperwork - it opens a gateway for banks to become a mainstream part of the digital‑asset economy.

Frequently Asked Questions

What exactly did the Federal Reserve rescind?

The Fed withdrew Supervisory Letters SR22‑6 (advance‑notice requirement) and SR23‑8 (non‑objection process). Banks no longer need to file special notifications before offering most crypto‑related services.

Can national banks now hold any crypto on their balance sheets?

Not yet. The current guidance still treats non‑stablecoin tokens as high‑risk. Banks may hold stablecoins, but broader crypto‑asset balance‑sheet treatment will need additional guidance.

How does the OCC’s Interpretive Letter 1183 change things for banks?

Letter1183 removes the requirement for a “supervisory non‑objection” before banks engage in crypto custody, stablecoin holdings, or node participation, effectively treating these activities like any other banking service.

Will the FDIC still review crypto activities?

Yes. The FDIC’s new guidance says institutions may proceed without prior approval, but they must still manage risks and comply with AML and consumer‑protection rules, which are reviewed in regular supervisory exams.

What gaps should banks watch for in the future?

Key gaps include guidance on crypto‑lending, balance‑sheet treatment of non‑stablecoin assets, and cross‑border token services. Expect further clarification from the President’s Working Group later this year.

19 Comments

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    Ayanda Ndoni

    October 10, 2025 AT 21:07

    lol finally they got around to it. took long enough. i was about to open a crypto bank in my garage.

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    Jonathan Tanguay

    October 11, 2025 AT 01:42

    you think this is progress? nah this is just the fed trying to look like they're not totally clueless after 3 years of panic-driven overregulation. SR-22-6 and SR-23-8 weren't just annoying-they were *anti-innovation*. now banks can finally stop treating crypto like it's radioactive plutonium and start treating it like an asset class. but don't get me wrong-this is still just the bare minimum. they still won't let you hold BTC on your balance sheet? classic. they're scared of real decentralization. they want stablecoins because they're basically digital dollars under a different name. this isn't freedom-it's controlled assimilation.

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    Ali Korkor

    October 11, 2025 AT 17:07

    big win for regular folks who just want to use crypto without jumping through 17 hoops. banks finally getting the memo. this is how you do it-clear rules, no nonsense. keep it going!

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    Akinyemi Akindele Winner

    October 12, 2025 AT 08:37

    oh wow the fed finally realized crypto isn't a cult? shocking. next they'll admit the moon is made of cheese and the dollar is just a meme. this is just stage one of the great bank heist-let them hold stablecoins so they can launder fiat through blockchain while the rest of us get taxed into oblivion. i call it the 'crypto velvet revolution'-soft on the surface, brutal underneath.

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    Elliott Algarin

    October 12, 2025 AT 19:32

    i wonder if this will lead to banks becoming digital custodians of public trust-or just another layer of intermediaries in a system that was meant to remove them. there's something poetic about institutions that spent years warning against crypto now being the ones to onboard it. maybe this is the quiet end of the old guard's fear… or just the beginning of a more sophisticated control.

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    John Murphy

    October 13, 2025 AT 10:56

    the fact that they had to rescind two letters just to let banks do basic crypto stuff says everything about how broken the last few years were. i dont think people realize how much innovation got stalled because of that paperwork. now the real work starts-building systems that are safe without being suffocating

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    Zach Crandall

    October 13, 2025 AT 21:14

    while this is technically a step forward, the regulatory architecture remains fundamentally colonial in nature. the fed, the occ, the fdic-all acting as gatekeepers who decide what 'permissible' means. this is not liberation. it is licensing. and the moment a bank fails, the regulators will once again blame the product, not the policy. we are still not free.

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    MANGESH NEEL

    October 14, 2025 AT 05:33

    you people are acting like this is a victory. let me remind you-this is just the fed letting banks play with the toy they spent years calling evil. meanwhile, real crypto folks are running nodes in basements, holding keys themselves, and laughing at the idea that a bank with a 19th century risk model can handle blockchain. this isn't progress-it's co-optation. and the moment the market dips, they'll blame 'unregulated crypto' again and push for new restrictions. you're being played.

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    Patrick De Leon

    October 14, 2025 AT 08:33

    finally some common sense. europe's been doing this for years. the u.s. was dragging its feet like a toddler refusing to wear shoes. now banks can actually compete. if you're still scared of crypto you're not a banker-you're a relic

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    Sean Huang

    October 14, 2025 AT 13:27

    they're not removing restrictions... they're just hiding them. the fed didn't say 'you can do whatever'-they said 'you can do what we approve of'. and guess what? the 'risk assessment' reports? those are the new non-objection letters in disguise. and who writes them? the same consultants who wrote the old rules. this is theater. watch for the first bank to get fined for 'crypto exposure' next quarter. it's already written

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    madhu belavadi

    October 14, 2025 AT 20:04

    i just hope this doesn't mean my credit union starts pushing bitcoin ads during my mortgage call. i came here for savings, not a crypto casino

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    Dick Lane

    October 14, 2025 AT 21:05

    the real test is whether banks actually build good custody systems or just outsource it to some shady third party and call it done. been there seen that with aml and now it's crypto. same playbook

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    Norman Woo

    October 15, 2025 AT 03:46

    they still dont get it. if you need a 6 step checklist to hold a token... you're not ready. crypto is supposed to be open. this feels like letting a library rent out books but only if you fill out 3 forms and get a background check

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    Serena Dean

    October 16, 2025 AT 03:44

    so excited to see community banks finally get in on this! this is huge for financial inclusion. if even one small bank in rural america offers stablecoin accounts, that’s a win. you don’t need to be a Wall Street giant to help people-just a good system and honest intent. keep going!

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    James Young

    October 16, 2025 AT 23:27

    you all are acting like this is some revolution. it’s not. the fed didn’t change its mind-they just realized crypto wasn’t going away and now they want to tax it, regulate it, and control it better. they’re not your friends. they’re the new middlemen with better lawyers. and the moment you think you’re free, they’ll slap on a 30% capital charge for stablecoins and call it 'prudential'. don’t be fooled.

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    Chloe Jobson

    October 17, 2025 AT 05:55

    this aligns with the broader trend of regulatory harmonization in digital assets. the key now is interoperability between legacy systems and on-chain infrastructure. the real challenge is not custody-it’s settlement finality and cross-border compliance. we’re moving from permissioned to permissionless governance, but the institutional layer still needs to evolve

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    Andrew Morgan

    October 17, 2025 AT 19:23

    the fact that we even needed letters to tell banks they could hold digital assets is wild. like telling someone they can use a hammer after 3 years of saying hammers are dangerous. now let’s just hope they don’t turn crypto into another boring bank product with 12% fees and a 3-day hold

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    Michael Folorunsho

    October 18, 2025 AT 09:14

    the american financial system is being slowly hollowed out by technocratic elites who pretend to be progressive but are just extending control under the guise of innovation. this isn't progress-it's institutional capture. the fed doesn't trust the people with crypto-they trust the banks to filter it. and the banks? they trust consultants. the people? they're still just customers.

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    Roxanne Maxwell

    October 18, 2025 AT 22:54

    i'm just glad my cousin in texas can finally open a crypto wallet through her local credit union. she’s never trusted big banks, but she trusts her community. this is what real change looks like-not headlines, but quiet access.

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