FDIC Ends Pre-Approval Requirement for Banks Engaging in Crypto

The Federal Deposit Insurance Corp. (FDIC) has eliminated its 2022 requirement that banks obtain pre-approval before engaging in cryptocurrency-related activities. This shift marks a significant change in how U.S. banks can approach digital assets, easing restrictions that effectively sidelined many institutions from the crypto sector.

Previously, banks under FDIC oversight were told to avoid new crypto engagements while the agency developed policies. However, those policies never materialized, leaving many institutions in regulatory limbo. This guidance was part of a broader cautious stance also adopted by the Federal Reserve and the Office of the Comptroller of the Currency (OCC), both of which have recently started to relax their positions as well.

The updated guidance, announced Friday, follows a broader policy shift under former President Donald Trump, who appointed crypto-friendly leaders across financial regulatory agencies. FDIC Acting Chairman Travis Hill said the move represents a break from the flawed strategy of the past three years and signaled further steps to support safe crypto adoption in banking.

Banks can now engage in crypto and blockchain activities without waiting for FDIC sign-off, provided they manage associated risks responsibly. The change comes amid growing scrutiny over regulatory efforts to limit bank participation in digital assets, highlighted by legal battles and disclosed FDIC communications with institutions like Coinbase.

Bo Hines, Director of the White House Council of Digital Assets Advisers, welcomed the FDIC’s updated stance, calling it a “huge step forward” for the industry. As regulators continue to rethink their approach, this decision could re-open banking doors for crypto companies and foster broader blockchain innovation within the U.S. financial system.

This move may signal a more favorable regulatory climate ahead for crypto adoption across traditional finance.