US Federal Reserve Announces Withdrawal of Its 2022 Supervisory Letter on Banks Processing Crypto

THE Federal reserve announced the withdrawal of his surveillance letter in 2022 (SR 22-6 / CA 22-6), which had forced the banks member of the State to inform the Fed before engaging in activities related to the assembly of crypto. He also canceled a surveillance letter in 2023 (SR 23-8 / CA 23-5) which described a non-object process for banks that engage in token activities at a dollar (Stablecoin). In addition, the Fed, alongside the FDIC and the OCC, withdrew two joint declarations in 2023 warning the banks on the risks linked to the crypto.

This change eliminates the requirements of prior notification and approval, allowing banks to manage cryptographic transactions under standard supervision processes. This decision is aligned with the evolution of risk assessments and aims to promote innovation, reflecting a more permissive position under the Trump administration. Banks should always manage risks such as volatility, cybersecurity and compliance with laws, but the regulatory burden has been considerably reduced, which has enabled a broader adoption of cryptography in banking services.

Banks no longer need prior notification of the federal reserve or non-object for crypto-actor or stablecoin activities. This reduces bureaucratic obstacles, allowing faster integration of crypto services such as transactions processing, custody or stablecoin issuance. The drop in regulatory friction can encourage more banks, in particular the smallest banks of members of the state, to engage with the cryptographic markets. This could lead to a broader general adoption of cryptocurrencies and stablecoins in traditional finance.

This decision signals a pro-innovation position, probably influenced by the friendly policies of the Trump administration. Banks can explore new products, such as Crypto payment systems or tokenized asset services, promoting competition and technological progress. Despite deregulation, banks must always address the risks linked to crypto (for example, volatility, cybersecurity, AML / KYC compliance). Supervisors will monitor them in standard executives, which means that banks need robust risk controls to avoid a regulatory examination.

Easier bank access to crypto could improve liquidity and stability on cryptographic markets, as institutional participation increases. It can also stimulate the demand for stablescoins and other digital assets, which has a potentially impact on their evaluation and use cases. The United States is positioning itself as more user-friendly, potentially in competition with jurisdictions like the EU or Singapore. However, this may be delayed if complete legislation of cryptography is late, because regulatory clarity remains incomplete.

Reduced surveillance could expose banks to the volatility of the cryptography market or to illegal financial risks if risk management is inadequate. This could lead to a future regulatory tightening in the event of incidents. Overall, this change promotes a more permissive environment so that banks engage with the crypto, probably accelerating its integration into traditional finance, but it depends on the capacity of banks to effectively manage risks.

With reduced regulatory obstacles, banks can more easily engage with DEFI protocols, for example by facilitating transactions, providing custody of the assets linked to DEFI or by integrating with Stablecoin ecosystems (for example, USDC, USDT). This could create ramps on traditional finance users to access Defi. Banks dealing with cryptographic transactions could channel institutional capital in DEFI platforms, increase the liquidity of decentralized scholarships (DEX), loan protocols and yield of agriculture pools.

Adoption of the SUPPLY IN DEFI

The removal of the non-objection process for dollar tokens activities can encourage banks to issue or support the stoves, which are essential to the DEFI ecosystem (for example, for negotiations, loans and guarantees). This could strengthen the reliability and confidence of the stablescoin, which stimulates the adoption of challenge. Banks could develop their own stablecoins or associate with existing transmitters, integrating them into the DEFI protocols, which could reduce dependence on non -banking transmitters and align DEFI on regulatory standards.

Centralized decentralized vs services: As banks offer crypto services (for example, guard, trading, loans), they can compete directly with DEFI platforms, which offer similar functions without intermediaries. Conformity and regulatory trust of banks could remove users from DEFI, in particular for institutional or risk customers. Some banks can integrate DEFI protocols into their offers (for example, using DEX for liquidity or yield agriculture for customer wallets), blurring the border between centralized and decentralized finances.

While banks engage with the active ingredients or protocols linked to DEFI, regulators can focus more on the risks of DEFI (for example, intelligent contract vulnerabilities, money laundering). This could lead to future DEFI regulations, potentially stifling innovation or forcing protocols to adopt compliance measures. The involvement of banks could bring credibility to DEFI, encouraging regulators to create lighter executives rather than outright prohibitions, promoting a more stable environment for DEFI growth.

The participation of banks could arouse DEFI protocols to innovate, offering more sophisticated products to compete with banking services (for example, advanced yield strategies, cross -interoperability). Banks acting as footbridges could make it more accessible to users of little -familiar detail with portfolios or blockchain interfaces, widening the DEFI user base.

The involvement of banks could undermine the decentralized philosophy of Defi, because institutions could prioritize authorized or semi-centralized systems. This could fragment the DEFI ecosystem between purist protocols and friendly hybrids. The increase in institutional capital could amplify volatility on the DEFI markets, because large -scale transactions of banks have an impact on the prices of tokens or liquidity pools.

The change of policy aligns the United States with friendly cryptographic jurisdictions, potentially attracting developers and defined projects operated at the national level. However, without complete cryptography legislation, Defi’s regulatory uncertainty persists in relation to regions like the EU with Mica frames. Fed deregulation could reject DEFI with traditional finance, increase liquidity, use of stables and user access while promoting competition and innovation. However, he can also introduce a regulatory examination, the risks of centralization and the competition of banks, which calls into question the decentralized principles of DEFI.