Long

Chair

Reserve

<h2 id="us-federal-reserve-reverses-2023-crypto-guidance-to-foster-innovation">US Federal Reserve Reverses 2023 Crypto Guidance to Foster Innovation</h2>
<p>The US Federal Reserve has reversed its 2023 guidance that limited how banks supervised by the Fed could engage with cryptocurrencies, signaling a shift towards a more accommodating stance on digital assets. The move aims to adapt regulatory frameworks to the evolving financial landscape, potentially paving the way for greater institutional involvement in crypto markets.</p>
<h3 id="key-takeaways">Key Takeaways</h3>
<ul>
 <li>Former guidance mandated equal treatment for insured and uninsured banks, restricting uninsured institutions from engaging in certain crypto-related activities.</li>
 <li>The Fed announced that the guidance was outdated due to the evolving nature of the financial ecosystem.</li>
 <li>New policies introduce a pathway for federal reserve-supervised banks to pursue innovative activities, including crypto initiatives, under risk management standards.</li>
 <li>The decision was met with mixed reactions within the regulatory sphere, with some questioning the implications for financial stability.</li>
</ul>
<p><strong>Tickers mentioned:</strong> N/A</p>
<p><strong>Sentiment:</strong> Neutral</p>
<p><strong>Price impact:</strong> Neutral. The removal of restrictive guidance signals flexibility but does not immediately impact market prices.</p>
<p><strong>Trading idea (Not Financial Advice):</strong> Hold. Investors should await further developments regarding implementation and risk management standards.</p>
<p><strong>Market context:</strong> This development aligns with broader efforts to modernize financial regulation amid rapid innovation in digital assets.</p>
<h3 id="rewritten-article">Rewritten Article</h3>
<p>The Federal Reserve has officially rescinded its 2023 guidance that constrained how Fed-supervised banks, including uninsured institutions, could engage with cryptocurrencies. The previous policy mandated that uninsured banks adhere to the same rules as federally insured banks, based on the rationale that similar risks should be regulated uniformly. This restriction prevented uninsured banks from offering crypto services and disqualified them from Fed membership if their activities diverged from permitted norms.</p>
<p>The Federal Reserve cited the outdated nature of the guidance as the primary reason for its withdrawal, emphasizing that the financial system and its understanding of innovative products have significantly evolved. In a statement, the Fed acknowledged that the 2023 policy was no longer appropriate, indicating an openness to fostering innovative banking activities.</p>
<p>Caitlin Long, CEO of crypto-focused Custodia Bank, lauded the move, describing it as a necessary step for regulatory progress. She explained that the 2023 guidance was a barrier that previously hampered her institution’s efforts to obtain a master account — a crucial component that allows banks to hold balances directly with the central bank and access core payment systems, thereby settling transactions in central bank money rather than through third-party banks.</p>
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  <em>Source: </em><a href="https://x.com/CaitlinLong_/status/2001404175721378197?s=20" rel="noopener noreferrer nofollow"><em>Caitlin Long</em></a>
 </figcaption>
</figure>
<p>Long argued that the Fed’s use of the guidance to deny her bank’s master account was unlawful, highlighting that the policy was not official until February 2023, yet the Fed cited it earlier. She expressed optimism that recent leadership changes at the Fed might signal a move away from restrictive policies that previously hindered crypto-related innovation.</p>
<h3 id="new-guidance-aims-to-promote-innovation">New Guidance Aims to Promote Innovation</h3>
<p>The Fed’s latest guidance introduces a structured pathway for both insured and uninsured banks under Fed supervision to explore innovative activities, including cryptocurrencies, provided they meet established risk-management standards. Vice Chair for Supervision Michelle Bowman emphasized that supporting responsible innovation helps maintain a banking sector that is safe, sound, and modern.</p>
<h3 id="divided-opinions-within-the-fed">Divided Opinions within the Fed</h3>
<p>Despite the positive tone, the decision was not unanimous. Fed Governor Michael Barr dissented, arguing that maintaining equality among all banking institutions is crucial to safeguarding a level playing field and preventing regulatory arbitrage. Barr’s stance reflects ongoing tensions within regulatory circles about how best to balance innovation with stability, especially as some figures, like Barr, have face scrutiny over potential ties to efforts to limit crypto access.</p>
<p>This article was originally published as <a href="https://www.cryptobreaking.com/fed-opens-new-door-for/?utm_source=rss&amp;utm_medium=syndication&amp;utm_campaign=article_footer" rel="noopener noreferrer nofollow">Fed Opens New Door for Banks to Access Crypto Markets</a> on <a href="https://www.cryptobreaking.com/?utm_source=rss&amp;utm_medium=syndication&amp;utm_campaign=article_footer" rel="noopener noreferrer nofollow">Crypto Breaking News</a> – your trusted source for crypto news, Bitcoin news, and blockchain updates.</p>

Fed Opens New Door for Banks to Access Crypto Markets

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