Fed to End Oversight Program Targeting Banks’ Crypto and Fintech Ties

The U.S. Federal Reserve is winding down a specialized program that monitored banks’ involvement with cryptocurrency and financial technology firms, marking a notable change in how regulators approach emerging digital finance.

The program, launched to keep closer watch on banks experimenting with crypto custody, blockchain payments, and fintech partnerships, will be phased out in the coming months, officials confirmed Tuesday.

Why the Change Matters

The Fed had previously heightened scrutiny amid concerns over risk exposure, fraud, and money laundering tied to digital assets. But sources say regulators now plan to fold oversight of crypto and fintech activities into broader, standard supervisory practices—rather than keeping them in a separate track.

Industry Reaction

Banks and fintech firms have long argued that the program created unnecessary hurdles, slowing down innovation while offering little clarity. Industry advocates welcomed the decision, suggesting it could open the door to more mainstream partnerships between traditional finance and digital asset companies.

What’s Next

While the Fed is scrapping the dedicated unit, officials emphasized that oversight is not disappearing. Examiners will continue to monitor crypto exposure, payments technology, and partnerships—but under the same framework as other bank activities.

The move comes as Washington continues to debate the future of crypto regulation, with some lawmakers pushing for stricter guardrails and others calling for more space for innovation.

For banks exploring new digital ventures, the change signals a shift from “extraordinary scrutiny” toward normalized regulation—though risks around crypto remain firmly on regulators’ radar.