Together, the three regulators oversee every federally insured depository institution. Their coordinated revisions eliminate a subjective standard that experts said allowed examiners to block banking services to crypto firms.
Under the new guidance, Fed examiners will receive training to implement the change uniformly across all Board-supervised banks and will work with peer agencies “to promote consistent practices.”
The memo emphasizes that banks must continue to maintain robust risk management frameworks to safeguard their safety and soundness. Still, it clarifies that exam teams should address reputational effects only through specific legal, liquidity, or credit channels.
Furthermore, Powell acknowledged that regulators adopted a conservative stance after the 2022 market failures but said some guidance “may be relaxed to accommodate responsible innovation.”
Powell’s remarks echo testimony he gave to Congress in February, where he confirmed that existing supervisory frameworks permit banks to handle crypto so long as they manage capital, liquidity, and operational risks.
The Federal Reserve’s directive completes a three-month effort by federal regulators to remove reputational risk from bank supervision policy, leaving operational, legal, and financial criteria as the sole grounds for examiner action.
