August 18, 2025
By Anjali Kochhar
For years, crypto banking has lived under a microscope. The U.S. Federal Reserve’s special “novel activities supervision program” was built to keep watch over banks experimenting with digital assets and fintech ventures. But now, in a surprising shift, the Fed has announced it is shutting down the dedicated program altogether and moving crypto oversight back into its regular supervisory framework. The move signals that what was once treated as “experimental” may now be seen as part of business as usual.
A Strategic Shift Toward Integration
Originally conceived as a targeted oversight mechanism, the “novel activities” initiative aimed to ensure depositor safety and operational soundness amid growing involvement in cryptocurrency and digital ledger platforms. Now, the Fed asserts that its increased familiarity with these risks allows for a smooth transition back into routine supervision, removing the need for a separate specialised program. The regulatory letter initiating the program will also be formally rescinded.
Regulatory Ripples From Operation Chokepoint 2.0
Critics have tied the specialised program to Operation Chokepoint 2.0, a controversial regulatory posture widely interpreted as targeting crypto firms by indirectly pressuring banks to curtail services. The program’s discontinuation is being hailed by proponents of crypto-friendly reform, including Senator Cynthia Lummis, who called it a big win for putting an end to Operation Chokepoint 2.0 and a real step toward a level playing field for crypto.
Momentum Toward a More Welcoming Regulatory Landscape
The Fed’s move complements broader deregulatory trends in the crypto space. Earlier this year, regulators including the Fed, FDIC, and OCC collectively withdrew guidance that previously required banks to seek approval before engaging in cryptocurrency or stablecoin activities. These rollbacks reflect a growing institutional openness toward fostering innovation within digital finance.
Why It Matters
By folding crypto oversight into standard supervision, regulators signal a normalisation of crypto-related banking services. Devolving from specialised scrutiny toward mainstream integration suggests confidence in financial institutions’ capabilities to manage blockchain-related risks effectively.
Closing Note
The end of the Fed’s crypto-specific watchdog program doesn’t just mark a regulatory shift it’s a signal. Crypto is no longer a side experiment under constant suspicion. It is stepping into the financial mainstream, where the real battle for its future will now play out.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
