WASHINGTON–Effective Feb. 15, the Federal Reserve Board has ended its Novel Activities Supervision Program and reabsorbed the oversight of crypto and fintech-related bank activities into its standard supervisory procedures.
“Since the Board started its program to supervise certain crypto and fintech activities in banks, the Board has strengthened its understanding of those activities, related risks, and bank risk management practices,” the Fed said in a statement. “As a result, the Board is integrating that knowledge and the supervision of those activities back into the standard supervisory process and is rescinding its 2023 supervisory letter creating the program,” the announcement details.
Originally launched under supervisory letter SR 23-7 in August 2023, the program was designed to monitor novel banking practices including crypto custody, stablecoin issuance, tokenized assets, and API-based partnerships with nonbanks.
‘Risk-Based Framework’
The program provided a risk-based framework that sought to enhance scrutiny of certain financial innovations after questions were raised over the adequacy of existing supervision tools. By folding this oversight back into its regular supervisory structure, the Fed said in its statement that it intends to streamline operations “without compromising its updated understanding of the unique risks posed by digital asset activities.”The change has the support of the crypto and digital assets industries, as well as the House Financial Services Committee, which issued a statement of support.
