Key Takeaways
- The Fed confirmed that the “novel activities supervision programme” will be shut down.
- The framework was created in August 2023 to monitor banks offering services such as deposits, payments, and lending to crypto firms and fintech companies.
In a significant development, the Federal Reserve said it will discontinue a supervisory programme introduced in 2023 to oversee banks engaged in activities linked to crypto assets and distributed ledger technology.
In a notice released on Friday, the Fed confirmed that the “novel activities supervision programme” will be shut down. The framework was created in August 2023 to monitor banks offering services such as deposits, payments, and lending to crypto firms and fintech companies. At the time, the central bank described the effort as “risk-focused” and designed to strengthen oversight of emerging technologies within the banking system.
According to the Fed, the programme has achieved its initial objectives. Officials said the Board has gained a stronger understanding of how banks manage risks associated with crypto-related business. With that knowledge, the Fed said it would integrate supervision of such activities into its standard oversight process and withdraw the supervisory letter that established the initiative two years ago.
The change comes amid a wider adjustment in Washington’s approach to digital assets. Under the Trump administration, regulators have eased their posture towards crypto. Since January, the Securities and Exchange Commission (SEC) has closed several investigations and dropped enforcement actions involving digital asset firms. In parallel, Treasury officials have indicated alignment with a White House plan to create a national crypto reserve.
The policy shift comes amid Treasury Secretary Scott Bessent looking calls for lower interest rates. In an interview with a media house on 13 August, Bessent argued that the Federal Reserve should begin a series of cuts to its benchmark rate, starting with a 50 basis point reduction in September. He added that rates should ultimately fall by 150 to 175 basis points to match prevailing economic conditions.
“There’s a very good chance of a 50 basis point rate cut,” Bessent said, emphasising that current models suggest the Fed’s target rate is too high.
