In a significant shift for the financial sector, the Federal Deposit Insurance Corporation (FDIC) and the Commodity Futures Trading Commission (CFTC) have relaxed key restrictions on crypto-related activities for banks and derivatives traders.
FDIC Opens the Door for Banks to Engage in Crypto Activities
The FDIC announced on March 28 that financial institutions under its oversight, including banks, no longer require prior approval to engage in crypto-related activities. This decision overturns a previous mandate under the Biden administration that required banks to notify the agency before engaging in such ventures.
According to the FDIC’s updated guidelines, crypto-related activities encompass a broad range of functions, including:
- Acting as crypto-asset custodians
- Maintaining stablecoin reserves
- Issuing cryptocurrencies and other digital assets
- Operating as market makers or exchange/redemption agents
- Participating in blockchain and distributed ledger-based settlement or payment systems
- Engaging in associated activities such as lending and financial intermediary services
While the FDIC has lifted prior approval requirements, it urges financial institutions to assess potential risks, including market volatility, liquidity concerns, cybersecurity threats, compliance with consumer protection laws, and adherence to Anti-Money Laundering regulations.
This decision follows the FDIC’s removal of the “reputational risk” category from bank examinations on March 25, paving the way for banks to explore digital asset services without undue regulatory pressure. Previously, reputational risk was a key factor limiting banks’ engagement with certain industries, including crypto.
CFTC Levels the Playing Field for Digital Asset Derivatives
The CFTC has also taken a major step in integrating crypto into mainstream finance. On March 28, the agency rescinded a prior staff advisory letter, confirming that digital asset derivatives will now be treated like any other derivative products. This change, effective immediately, removes a major regulatory uncertainty that had previously clouded the crypto derivatives market.
Shifting Landscape Under Trump Administration
These regulatory shifts align with a broader pro-crypto stance under President Donald Trump, who has pledged to position the United States as “the crypto capital of the planet.”
Major crypto firms are already adapting to this evolving regulatory climate. On March 10, Coinbase announced round-the-clock Bitcoin and Ether futures trading and is reportedly planning to acquire crypto derivatives exchange Derebit. Meanwhile, Kraken, another leading US-based crypto exchange, announced on March 20 its acquisition of NinjaTrader, positioning itself to expand into the US crypto futures and derivatives market.
With these changes, US banks and crypto firms now have more flexibility to innovate and expand in the digital asset space, signaling a new era of regulatory openness for the industry.