On March 28, the FDIC issued updated guidance clarifying the process for FDIC-supervised institutions to engage in crypto-related activities. The guidance rescinds and replaces prior instructions issued in 2022 and makes clear that banks no longer need to seek prior FDIC approval before participating in permissible crypto activities.

Under the revised policy, institutions may pursue crypto activities that are legally permissible and conducted in a safe and sound manner. The guidance also emphasizes the need for robust risk management and compliance with applicable laws and regulations. Covered crypto activities include, but are not limited to:

• Acting as custodians of crypto assets;
• Maintaining stablecoin reserves on behalf of issuers;
• Issuing crypto and other digital assets;
• Acting as market makers, or as exchange or redemption agents for transactions involving crypto assets;
• Participating in blockchain-based settlement or payment systems or performing node functions; and
• Engaging in related activities such as acting as a finder or providing lending services.

The FDIC emphasized that institutions must consider risks related to market volatility, cybersecurity, liquidity, consumer protection, and anti-money laundering compliance. The agency also indicated it will issue further guidance and work with other banking regulators to replace interagency statements issued in early 2023 addressing crypto-asset risks and liquidity vulnerabilities.

Putting It Into Practice: By removing the prior notice requirement, the FDIC has signaled a more open approach to regulated banks engaging in digital asset activities. The move follows similar developments from other federal regulators with respect to crypto oversight (previously discussed here, here, and here). As federal regulators continue to move toward the integration of digital assets into the banking system and traditional financial services, banks should carefully monitor these developments as they unfold.