The U.S. Federal Reserve has officially withdrawn its 2023 policy statement that imposed limits on how state-chartered banks could engage with crypto-related and other innovative financial activities, replacing it with a new framework designed to support “responsible innovation” within the banking system.
According to a statement released Wednesday, the Federal Reserve Board rescinded the earlier guidance and issued a new policy clarifying how Board-supervised banks may participate in innovative products and services without being constrained by the restrictions introduced two years ago.
“New technologies offer efficiencies to banks and improved products and services to bank customers,” said Vice Chair for Supervision Michelle W. Bowman. “By creating a pathway for responsible, innovative products and services, the Board is helping ensure that the banking sector remains safe and sound while also modern, efficient, and effective.”
Why the 2023 Policy Was Reversed
In 2023, the Federal Reserve adopted a policy that effectively limited state member banks under its supervision to the same activities permitted for banks overseen by other federal regulators. The guidance included specific language on how the policy would apply to emerging financial technologies and innovative services, including crypto-related activities.
However, the Fed acknowledged that both the financial system and its understanding of innovative products have evolved significantly since then.
“As a result, the 2023 policy statement is no longer appropriate and has been withdrawn,” the Board stated.
New Framework Expands Access to Innovation
Under the newly issued policy, both insured and uninsured state member banks supervised by the Federal Reserve are now granted a clearer pathway to engage in certain innovative activities. The updated framework is intended to balance innovation with financial stability, rather than imposing blanket limitations.
The change marks a meaningful shift in the Fed’s approach, signaling greater openness toward financial innovation — including crypto infrastructure — within the regulated banking sector.
Implications for Stablecoin and Crypto Infrastructure Providers
The policy update is particularly significant for companies operating in the digital asset and stablecoin space, including firms such as Circle, Paxos, Tether, and BitGo.
Under the new framework, these companies may be able to hold customer reserves directly at the Federal Reserve rather than routing all funds through commercial banks. This shift could reduce operational costs, lower counterparty risk, and provide greater control over liquidity and fund flows.
Previously, several crypto-native firms attempted to gain access to the Federal Reserve’s payment infrastructure through alternative routes, most commonly by pursuing specialized bank charters. The new policy may reduce the need for such workarounds, offering a more direct and regulated avenue for participation.
A Broader Signal to the Market
The withdrawal of the 2023 restrictions reflects a broader recalibration by U.S. regulators as crypto, stablecoins, and blockchain-based financial infrastructure become increasingly integrated into the traditional financial system. Rather than outright limiting innovation, the Federal Reserve appears to be shifting toward structured oversight — allowing new technologies to develop within the banking system while maintaining regulatory guardrails.