Core Viewpoint - The Federal Reserve has announced the closure of its "Novel Activity Supervision Program" established in 2023, which aimed to enhance the regulation of cryptocurrency activities in the banking sector, reflecting a shift in the U.S. regulatory stance towards the crypto industry [1] Group 1 - The Federal Reserve Board stated that it has deepened its understanding of certain cryptocurrency and fintech activities, as well as the associated risks and banking risk management practices since the initiation of the regulatory program [1] - The knowledge gained from this program will be integrated back into standard regulatory processes, leading to the withdrawal of the regulatory letter that established the program in 2023 [1] - The latest requirements simplify the compliance processes for banks engaging in cryptocurrency activities, while core regulatory principles such as anti-money laundering and consumer protection remain unchanged [1] Group 2 - Prior to this announcement, the crypto industry had accused U.S. regulators of deliberately obstructing their connections with the banking sector [1]

Core Viewpoint - The Federal Reserve has closed its Novel Activities Supervision Program, which was aimed at enhancing the regulation of cryptocurrency activities in the banking sector, reflecting a shift in the regulatory stance towards the crypto industry [1][5]. Group 1: Regulatory Changes - The closure of the program is part of a broader trend among U.S. regulators to change their approach to the cryptocurrency industry [5]. - The Federal Reserve has integrated its understanding of cryptocurrency-related risks back into standard regulatory processes, indicating a move towards a more streamlined compliance framework for banks engaging in crypto activities [5]. - Core regulatory principles such as anti-money laundering and consumer protection remain unchanged despite the simplification of compliance processes [5]. Group 2: Background and Context - The program was initiated in response to the 2023 banking crisis, which saw the collapse of three banks closely tied to the cryptocurrency sector: Silicon Valley Bank, Silvergate Bank, and Signature Bank [5]. - The Federal Reserve's decision reflects a recognition of the risks posed by innovative yet unverified technologies to the banking system [5]. Group 3: Recent Developments - Earlier in 2023, the Federal Reserve retracted guidance requiring banks to obtain regulatory approval before engaging in new crypto activities, allowing banks to make independent decisions under existing risk management requirements [6]. - In July 2023, the Federal Reserve, along with two other federal banking regulators, issued joint guidance on how banks can provide cryptocurrency custody services, clarifying that this does not introduce new regulatory requirements [6].