Federal Reserve to expand oversight of crypto-related activities at banks

The program will be folded in under current supervisory processes with “experts working alongside current supervisory teams to oversee banks engaged in novel activities”

article-image

Federal Reserve Chair Jerome Powell | Federal Reserve (CC license)

share

The Federal Reserve says it will expand how it oversees the crypto activities of US regulated banks. 

The move by the US central bank falls under the “novel activities supervision program” the Federal Reserve introduced on Tuesday, which includes cryptocurrencies and additional emerging asset classes. It also covers applications of distributed ledger technology that have the “potential for significant impact on the financial system.”

According to a published outline of the program’s aims, regulators will “enhance the supervision of novel activities” such as “crypto-asset custody, crypto-collateralized lending, facilitating crypto-asset trading, and engaging in stablecoin/dollar token issuance or distribution.” 

The program will also focus on distributed ledger technology (DLT), and other “technology-driven partnerships with nonbanks to deliver financial services to customers.”

The program is designed to ensure, the Federal Reserve said in documents Tuesday, that state member banks will “place controls to conduct the activity in a safe and sound manner.”

The Fed said that “given the novelty” of new technologies — including crypto — questions “may not be sufficiently addressed by existing supervisory approaches, and may raise concerns for the broader financial system.”

This oversight includes projects that use DLT, as well as traditional banking entities that engage in certain crypto activities, such as lending deposits or payments. Tokenization was also a key area of focus the regulator outlined. 

The program will be folded in under current supervisory processes, according to a statement from the Fed, with “program experts working alongside current supervisory teams to oversee banks engaged in novel activities.”

“The Program will help ensure that regulation and supervision allow for innovations that improve access to and the delivery of financial services, while also safeguarding bank customers, banking organizations, and financial stability,” the Fed said.

It wasn’t immediately clear which firms would be subject to the Federal Reserve’s more stringent oversight. 

State member banks have been tasked with obtaining written approval from the Fed prior to using DLT or “similar technologies to conduct payments activities as principal, including by issuing, holding, or transacting in dollar tokens.”

But the financial regulator said that, on the banking side, all banks “supervised by the Federal Reserve,” including those with $10 billion or less in consolidated assets” would fall under the program’s jurisdiction. The classification suggested that regional financial operators would fall under that umbrella — not just bulge-bracket banks. 

It also added that the program is “risk-based” and the “level and intensity of supervision will vary based on the level of engagement in novel activities by each supervised banking organization.”

Updated Tuesday, Aug. 8 at 5:35 pm ET: Added context about state member banks.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /