US Fed to end oversight program for banks' crypto activities
tradingview.com -- Friday, August 15, 2025, 3:59:05 PM Eastern Daylight Time
Categories: State Politics & Governors
The Federal Reserve Board said that it would end a "novel activities supervision program" set up in 2023 to supervise certain activities related to crypto assets and distributed ledger technology.
In a Friday notice, the Fed said it will sunset the program created in August 2023 and return to "monitoring banks' novel activities through the normal supervisory process." The 2023 program said it would be "risk-focused" and include supervision of banks providing "deposits, payments, and lending to crypto-asset-related entities and fintechs."
"Since the Board started its program to supervise certain crypto and fintech activities in banks, the Board has strengthened its understanding of those activities, related risks, and bank risk management practices," said the Fed. "As a result, the Board is integrating that knowledge and the supervision of those activities back into the standard supervisory process and is rescinding its 2023 supervisory letter creating the program."
Though not necessarily suggesting a scaleback in oversight of banks dealing with crypto companies, US government agencies have taken a softer approach to regulating and handling digital assets under the Trump administration.
Since January, the Securities and Exchange Commission has dropped several investigations and enforcement actions into crypto companies, and statements from leadership at the Treasury suggested the department would fall in line with the White House's policy setting up a national crypto reserve.
Leadership at the Fed becoming a political issue
US President Donald Trump has been publicly challenging the Fed's independence in determining federal interest rates, often personally criticizing Chair Jerome Powell, whom he nominated in 2017. Powell's term as chair is expected to end in May 2026, while his term as a Fed governor won't end until January 2028.
Sign Our PetitionThe recent decision by the Federal Reserve Board to terminate its "novel activities supervision program" for banks' involvement in cryptocurrency is a significant development in the ongoing discourse surrounding financial regulation and the role of governmental oversight in safeguarding the public interest. This move is reflective of a broader trend in which financial institutions are increasingly being allowed to operate with less scrutiny, particularly in the burgeoning and often volatile crypto market. The historical implications of this decision cannot be understated, as it signals a retreat from the protective measures that emerged in the wake of the 2008 financial crisis, when the need for robust oversight became painfully apparent.
The "novel activities supervision program" was initially established in August 2023 in response to the rapid growth of cryptocurrency and the associated risks that banks face when engaging with crypto-assets and fintechs. The Fed's decision to revert to a more conventional supervisory approach raises red flags about the prioritization of innovation over consumer protection. Historically, regulatory bodies have sometimes been slow to adapt to new technologies, but the need for a balance between encouraging innovation and ensuring that financial systems are not destabilized is crucial. The 2008 financial crisis taught us that lax oversight can lead to catastrophic consequences, and the lessons learned from that period seem to be at risk of being forgotten.
Moreover, this shift in regulatory stance is symptomatic of a larger ideological battle over the role of government in regulating markets. The Trump administration's influence in shaping financial regulation, particularly its tendency to prioritize deregulation, is evident in the recent actions of multiple government agencies. The withdrawal of investigations and enforcement actions by the Securities and Exchange Commission, along with the leniency exhibited by the Treasury Department, creates an environment where market forces can operate without the checks and balances that are essential for consumer protection. This laissez-faire approach, reminiscent of pre-2008 attitudes, raises questions about the implications for everyday citizens who may become collateral damage in the event of a crypto market downturn.
Additionally, the political dimension of the Fed's decision cannot be ignored. President Trump's ongoing public critique of the Federal Reserve and its leadership underscores the tension between political power and economic governance. By challenging the Fed's independence, Trump has sought to reshape the institution's priorities and decisions to align with his administration's agenda, which has often favored financial institutions over the welfare of ordinary Americans. This dynamic highlights the importance of maintaining the integrity of regulatory bodies, which must operate free from political pressures in order to effectively manage the risks inherent in complex financial systems.
Finally, it is crucial to consider the broader social implications of decreased regulatory oversight in the crypto space. As banks become more deeply embedded in cryptocurrency transactions, the potential for financial exploitation and fraud increases, particularly for vulnerable populations who may not fully understand the complexities of digital assets. The rise of crypto has often been touted as a democratizing force in finance, providing access to individuals who have historically been marginalized by traditional banking systems. However, without adequate oversight, this potential can quickly turn into predatory practices that further entrench economic inequality. Advocating for stronger regulatory frameworks is essential not only for the stability of the financial system but also for ensuring that the benefits of technological advancements are equitably distributed across society.
In conclusion, the Federal Reserve's decision to end its specialized oversight program for banks' crypto activities represents a concerning trend towards deregulation that echoes past mistakes. As history has shown, when oversight is diminished in favor of innovation, it is often the most vulnerable who bear the brunt of the consequences. The political dynamics at play further complicate the issue, emphasizing the need for an independent regulatory framework that prioritizes consumer protection and financial stability. Engaging in this discourse is vital for fostering a more equitable financial landscape that serves the interests of all, rather than a select few.
The recent decision by the Federal Reserve to terminate its oversight program for banks’ activities related to cryptocurrency is a pivotal moment in the ongoing dialogue about financial regulation and the role of cryptocurrencies in our economy. Established in 2023, the program aimed to bring a "risk-focused" lens to banks' involvement with crypto assets, signaling an acknowledgment of the potential dangers posed by this relatively new financial frontier. The Fed's move to incorporate these responsibilities back into existing supervisory processes raises important questions about the balance between innovation and regulation, particularly in an era when technological advancement is outpacing legislative response.
Historically, the rise of cryptocurrencies has been met with a combination of skepticism and cautious optimism. The 2008 financial crisis highlighted the catastrophic consequences of unregulated financial practices, leading to a surge in calls for more stringent oversight in various sectors, including banking. However, as the landscape of finance evolves, it appears that regulatory bodies are retreating from the proactive stance they once took. The Fed's decision to end this oversight program, particularly under a governance structure influenced by political pressures, reflects a troubling trend: a willingness to prioritize the interests of financial institutions over the protection of consumers and the stability of the economy.
As individuals concerned about the implications of this shift, we must engage in proactive measures to ensure that regulatory frameworks adequately protect the public interest. One of the most effective actions we can take is to advocate for comprehensive regulations that govern cryptocurrencies and related financial technologies. This can be achieved by mobilizing grassroots campaigns, contacting our representatives, and urging them to support legislation that prioritizes consumer protection and financial stability. By emphasizing the historical lessons learned from past financial crises, we can create a compelling narrative that underscores the need for vigilance in the face of technological innovation.
Moreover, educating ourselves and others about the risks and rewards of cryptocurrency can facilitate informed discussions with those who may hold differing viewpoints. By sharing knowledge about past regulatory failures and the potential dangers of unregulated financial systems, we can challenge the narrative that paints cryptocurrency as a wholly positive development. It is crucial to highlight the volatility associated with these assets, the potential for fraud, and the environmental concerns tied to cryptocurrency mining, which often receives less attention than it deserves. Engaging in these discussions can help to reshape public perception and, subsequently, political action regarding financial regulation.
Ultimately, the decision to end the Fed's oversight program reflects broader political dynamics at play, including the influence of the Trump administration on financial regulatory bodies. It is essential to recognize how political leadership can shape the landscape of financial oversight and the implications this has for the public. By holding our leaders accountable and demanding transparency in regulatory practices, we can help ensure that the financial system is not unduly influenced by partisan politics. As we move forward, we must remain vigilant, advocating for regulations that prioritize consumer protection, economic stability, and accountability within the financial sector. Through collective action and education, we can work towards a financial system that serves the interests of all Americans, not just a privileged few.
Given the recent decision by the Federal Reserve to end its oversight program for banks' activities related to cryptocurrency, there are several actions we can take as individuals to advocate for stronger regulation and oversight in this rapidly evolving financial landscape. Here are some ideas and concrete steps to consider:
### What Can We Personally Do About This?
1. **Stay Informed**: Understanding the implications of the Federal Reserve's decision and the broader context of cryptocurrency regulation is crucial. Regularly read articles, attend webinars, or join discussion groups focused on financial regulation, cryptocurrency, and digital assets.
2. **Engage in Conversations**: Talk to friends, family, and community members about the importance of regulatory oversight in the crypto space. Raising awareness can help build a more informed public.
3. **Support Regulatory Organizations**: Identify and support organizations that advocate for strong financial regulations and consumer protections in the cryptocurrency space.
### Exact Actions We Can Take
1. **Sign Petitions**: - **Petition for Stronger Regulation**: Search for online petitions that advocate for stricter regulations on cryptocurrency and related financial products. Websites like Change.org or Care2 often host such petitions. - Example: Look for a petition titled “Demand Stronger Oversight of Cryptocurrency” on Change.org. Signing and sharing this petition can amplify our collective voice.
2. **Write to Elected Officials**: - **Who to Write To**: - Your local congressional representative. - Senators representing your state. - **Examples**: - **Senator Elizabeth Warren** (MA) - Email: senator_warren@warren.senate.gov - Mailing Address: 2400 JFK Federal Building, 15 New Sudbury St, Boston, MA 02203 - **Representative Alexandria Ocasio-Cortez** (NY-14) - Email: ocasiocortez.house.gov/contact - Mailing Address: 1651 Grand Concourse, Suite 5, Bronx, NY 10457
3. **What to Say**: - Introduce yourself and mention you are a constituent. - Express your concern about the Federal Reserve's decision to end oversight of banks dealing with cryptocurrencies. - Advocate for a return to stronger regulatory measures that protect consumers from potential risks associated with digital assets. - Example message: ``` Subject: Urgent Request for Stronger Oversight of Cryptocurrency
Dear [Representative/Senator's Name],
As a concerned constituent, I am writing to express my alarm regarding the Federal Reserve's recent decision to end its oversight program for banks' activities related to cryptocurrency. This move risks exposing consumers to unregulated financial products and undermines the security of our financial system.
I urge you to support measures that reinstate robust oversight of cryptocurrency-related activities to protect consumers and ensure that our financial institutions operate within a safe and transparent framework.
Thank you for your attention to this critical issue.
Sincerely, [Your Name] [Your Address] [Your Email] ```
4. **Participate in Local Meetings**: - Attend town hall meetings or community forums where local leaders discuss financial regulations. Use this opportunity to voice your concerns and encourage others to do the same.
5. **Join Advocacy Groups**: - Consider joining or donating to organizations that focus on financial justice and consumer protection, like the Consumer Financial Protection Bureau (CFPB) or the Electronic Frontier Foundation (EFF). These organizations often have campaigns and initiatives that align with advocating for stronger oversight in the crypto space.
6. **Leverage Social Media**: - Use social media platforms to raise awareness about the importance of financial regulation in the crypto space. Share articles, personal insights, and calls to action to engage a broader audience.
By taking these steps, we can collectively push for the necessary oversight and regulation that will protect consumers and ensure the integrity of our financial systems in the face of rapidly evolving technologies like cryptocurrency.