Pic Credit: Ainvest
The US Federal Reserve announced a landmark decision to terminate its specialized “Novel Activities Supervision Program,” effectively ending heightened oversight of banks’ crypto and fintech activities. Initially launched in 2023 amid concerns triggered by the collapse of FTX and subsequent banking crises, the program required banks to navigate additional regulatory scrutiny when engaging with cryptocurrencies and related financial technologies.
This Friday, August 15, 2025, the Fed declared it will integrate crypto-related supervision back into its standard bank oversight processes. The shift reflects growing confidence in banks’ ability to manage crypto risks within existing regulatory frameworks without needing separate protocols or extra compliance burdens.
Banking institutions had to comply with specific requirements under the program, like submitting additional notifications for novel crypto activities, which often slowed innovation. Now, their digital asset operations will be subject to routine audits and standard risk assessments, particularly focusing on cybersecurity and operational resilience.
The Fed emphasized that while specialized supervision ends, oversight does not disappear. The central bank expects banks to maintain robust risk management practices as digital assets remain complex and raise unique challenges.
Industry experts view the move as a regulator’s signal of maturation in the crypto sector, potentially boosting US banks’ global competitiveness by reducing regulatory friction. It may also encourage greater innovation and expansion of crypto offerings, such as stablecoin custody and tokenized payments, within traditional banking institutions.
The decision parallels other government initiatives aimed at advancing stablecoin frameworks and expanding cryptocurrency options in retirement investments, marking a broader acceptance of digital assets in mainstream finance.
However, the announcement triggered a modest pullback in leading cryptocurrencies like Bitcoin and Ethereum, following recent rallies sparked by hopes of upcoming Federal Reserve interest rate cuts.
Overall, this regulatory milestone underlines the Fed’s evolving approach—balancing caution with openness to innovation—as cryptocurrency increasingly integrates into the financial ecosystem. The termination of this special program signals trust in current supervisory methods while maintaining vigilance to safeguard financial stability.
