U.S. banks supervised by the Federal Deposit Insurance Corporation (FDIC) are no longer required to seek prior approval before engaging in cryptocurrency-related activities, following a regulatory update released on March 28. The FDIC issued a Financial Institution Letter, FIL-7-2025, which replaces the earlier FIL-16-2022 and outlines a revised approach toward digital asset engagement. Institutions must now demonstrate strong risk management capabilities internally before participating in crypto activities, aligning their operations with existing safety and soundness standards. The move signals a shift in regulatory posture as federal agencies reassess their stance on the integration of digital finance into traditional banking.
In 2022, the FDIC had made it mandatory for banks to notify the agency before taking on crypto activities. That approach faced criticism from some stakeholders who argued it limited innovation and delayed partnerships between traditional financial institutions and crypto firms. The updated guidance lifts that requirement, though it maintains an emphasis on robust internal controls. Similar regulatory openness was recently echoed by the Office of the Comptroller of the Currency (OCC), which reaffirmed the legality of crypto custody and other blockchain-related services for national banks through Interpretive Letter 1183.
What new standards must banks meet?
How are other agencies responding to digital asset banking?
Banks must now ensure all crypto-related activities are supported by comprehensive risk management frameworks. These should be consistent with those used for traditional financial services. The FDIC emphasized that institutions are individually responsible for maintaining operational integrity and consumer protection when dealing with digital assets. This approach allows greater flexibility while still placing accountability on institutions to meet regulatory expectations independently.
The OCC has also taken steps to clarify the permissible scope of crypto engagement for banks and federal savings associations. In its March 7 statement, it specified that services such as stablecoin issuance and participation in distributed ledger networks are allowed.
“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,”
Acting Comptroller of the Currency Rodney E. Hood stated, underlining the uniformity of standards regardless of technology type.
FDIC Acting Chairman Travis Hill indicated that this regulatory update was part of a broader strategic shift.
“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,”
Hill said. He also mentioned that more guidance is expected to follow, developed in coordination with other federal agencies, to further support banks in navigating crypto and blockchain activities responsibly.
This policy shift follows Coinbase’s efforts in February to enhance cooperation between traditional banks and crypto platforms. The crypto exchange actively lobbied for regulatory clarity to better integrate its services with established financial institutions. These developments come under a new administration that is considered more receptive to digital asset innovation, which has influenced broader federal attitudes toward enabling crypto partnerships in the banking sector.
Earlier announcements from regulatory bodies had been more restrictive, with agencies maintaining a cautious stance on the risks posed by volatile crypto markets. FIL-16-2022 required banks to inform the FDIC of any intention to engage in crypto activities, often delaying participation due to regulatory uncertainty. At the time, many institutions hesitated to expand into digital assets because of unclear rules and oversight concerns. The recent changes now offer banks more autonomy, provided they maintain adequate internal systems for managing risk and compliance.
The FDIC’s decision to revise its policy framework reflects a growing recognition that digital assets are becoming a more integrated part of the financial ecosystem. By shifting focus from pre-approval to risk-based self-management, the agency attempts to balance innovation with financial stability. Banks interested in exploring crypto services such as custody, stablecoin management, or blockchain validation should now focus on building strong internal controls and regulatory reporting systems. Institutions looking to enter the crypto space must also remain prepared for future updates, as federal regulators continue to refine their approach based on market and technological developments.
