Fed Signals Pro-Innovation Shift to Support Digital Asset Banking

Fed Commits to Clarifying Digital Asset Rules for Banks

Digital asset regulation is taking a more defined shape within U.S. bank supervision. Federal Reserve Vice Chair for Supervision Michelle W. Bowman delivered testimony before the Senate Banking Committee on Feb. 26, outlining actions already taken and additional steps planned to support responsible digital asset innovation within the regulated banking system.

“The Federal Reserve is encouraging banks to innovate to improve the products and services they provide. We have rescinded several policies that were intended to hinder innovation,” Vice Chair for Supervision Bowman stated. “We are also working with the other banking regulators to develop regulations that include capital and liquidity for stablecoin issuers as required by the GENIUS Act.” She continued:

“We will provide clarity regarding the treatment of digital assets to ensure that the banking system is well placed to support digital asset activities. This includes clarity on the permissibility of activities and willingness to provide regulatory feedback on proposed new use cases.”

Together, these remarks reflect a recalibration of oversight for crypto custody, tokenized payments, blockchain-based services, and stablecoin issuance within prudential guardrails.

In practice, the Federal Reserve rolled back several crypto-specific supervisory hurdles in 2025. In April, it rescinded SR 22-6 / CA 22-6 and SR 23-8 / CA 23-5, ending advance notification and written non-objection requirements for crypto activities and dollar tokens. It later sunset the Novel Activities Supervision Program in August, withdrew 2023 joint crypto risk statements, replaced restrictive Regulation H guidance in December, and in February 2026 moved to codify the removal of reputational risk from supervision.

Beyond digital asset-specific measures, Bowman emphasized proportional oversight for smaller institutions that may seek to engage in emerging financial technologies. “Community banks are and should be subject to less stringent standards than large banks, and there is significant opportunity to tailor regulations and supervision to the unique needs and circumstances of these banks,” she opined, emphasizing:

“We cannot continue to push policies and supervisory expectations designed for the largest banks down to smaller, less risky, and less complex banks.”

The combined approach signals a potential recalibration of supervision, as regulators work toward stablecoin rule development and digital asset clarity within existing statutory authority.

FAQ 🧭

• What does the Federal Reserve’s new approach mean for crypto in banks?
  It signals clearer rules for crypto custody, stablecoins, and tokenized payments within regulated banks.
• How will stablecoin issuers be regulated under the new framework?
  They will face capital and liquidity requirements developed alongside other banking regulators.
• What changes are coming for community banks exploring digital assets?
  Community banks may receive more tailored and less stringent supervision compared with large institutions.
• Why is regulatory clarity important for crypto investors?
  Clear supervision reduces uncertainty and could support broader institutional adoption of digital assets.