FDIC to Review Rule That Could Shape Banks' Relationship With the Crypto Sector

The crypto industry has long faced a challenge: despite growing adoption and institutional interest, many banks have avoided direct involvement with digital assets. One key reason has been regulatory pressure, particularly through the use of the term “reputational risk.”
Now, the Federal Deposit Insurance Corporation (FDIC) — the U.S. agency that insures bank deposits — is set to review and revise a rule that has had major implications for how banks engage with crypto firms.

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Why This Rule Matters

The Power of “Reputational Risk”

For years, regulators have warned banks that involvement with crypto could damage their reputation, justifying stricter oversight or outright rejection of crypto-related partnerships. Critics argue this vague concept has been used to discourage innovation and limit competition, effectively shutting crypto businesses out of traditional finance.

Previous Guidance: Mandatory Notification

In 2022, the FDIC issued guidance (FIL-16-2022) requiring banks under its supervision to notify the agency before engaging in any crypto-related activities.
This prior notification process was widely viewed as a bottleneck that prevented financial institutions from exploring blockchain-based products and services.

The New FDIC Stance

On March 28, 2025, the FDIC issued new guidance (FIL-7-2025) revoking the 2022 notification requirement and clarifying that banks can now engage in “permissible crypto activities” without seeking prior approval — provided they manage associated risks responsibly.

According to the FDIC, these activities may include:

Crypto custody services

Stablecoin reserve management

Token issuance and settlement

Participation in blockchain networks

This move aligns the FDIC with other regulators, such as the Office of the Comptroller of the Currency (OCC), which has also taken a more permissive approach toward digital asset innovation.

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Potential Impacts for Banks and the Crypto Industry

1. Greater Regulatory Freedom

By removing the pre-approval barrier, the FDIC is giving banks more freedom to innovate. This could open the door for traditional institutions to re-enter the crypto ecosystem through custody solutions, payment rails, and tokenized assets.

1. Risk Management Still Required

While the FDIC’s stance is more open, it still emphasizes safe and sound operations.
Banks must demonstrate proper risk management, compliance with anti-money laundering (AML) rules, cybersecurity standards, and consumer protection frameworks. The door is open — but only for those prepared to walk through it responsibly.

1. A Step Toward Ending “Debanking”

Many crypto companies have long complained of being “debanked” — excluded from access to basic financial services due to perceived regulatory risks.
This new FDIC direction could encourage banks to revisit crypto partnerships without fear of regulatory retaliation.

1. More Transparency in Supervision

The FDIC has also released documentation outlining how it supervises banks that engage in crypto-related activities. This transparency may help the industry understand where the real compliance boundaries lie.

1. Remaining Uncertainties

Despite the positive tone, key questions remain:

Which cryptoassets will be considered acceptable under FDIC supervision?

Can banks hold digital assets directly on their balance sheets?

How will stablecoin reserves be regulated?

What standards will apply to auditing and capital adequacy for tokenized assets?

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Conclusion: A Turning Point in Bank-Crypto Relations

The FDIC’s decision to review and revise its rule could become a defining moment for how traditional finance and the crypto sector interact.
If implemented effectively, it may mark a transition from regulatory fear to responsible experimentation — encouraging innovation within a safer, more transparent framework.

For both banks and crypto companies, this shift signals a new era: one where cooperation, rather than exclusion, could drive the next phase of digital finance.