The Federal Reserve has withdrawn its 2023 crypto restrictions, easing constraints on banks' "new" crypto businesses.

According to Mars Finance, on December 18th, the Federal Reserve announced the withdrawal of a restrictive policy statement issued in 2023, which had imposed a "strong objection presumption" on state member banks' involvement in the crypto industry. The Fed stated that this move reflects a change in its understanding of the relevant risks and will be replaced by a more flexible new policy in 2025. Under the new policy, state member banks holding FDIC deposit insurance remain subject to strict restrictions under Section 24 of the Federal Deposit Insurance Act; however, state member banks without deposit insurance can now apply to the Fed for approval on a case-by-case basis for certain prohibited activities. This means that banks have more regulatory space regarding "new activities" related to crypto assets. The Fed's statement noted that since the 2023 policy was issued, the financial system and regulators' understanding of innovative products and services has changed. While the previous policy did not completely ban crypto businesses, it essentially prevented banks from including crypto assets such as Bitcoin and Ethereum on their balance sheets or issuing stablecoins. This adjustment is seen as another signal of a continued shift in the US regulatory environment, against the backdrop of the Trump administration's public support for the digital asset industry. Previously, the Federal Reserve had closed its special regulatory program for crypto banks, established in 2023, this summer and jointly issued guidance on digital asset custody with the OCC and FDIC.