Federal Reserve Scraps Special Crypto Bank Oversight Team

Key Insights:

• Fed closes its crypto-focused oversight unit, citing improved internal expertise and updated supervision approach.
• Trump-era policy changes drive broader regulatory pullback on strict crypto banking oversight measures.
• Crypto industry and allies say closures reduce pressure on banks offering digital asset services.

The US Federal Reserve has officially closed the Novel Activities Supervision Program, which was introduced in 2023 to monitor banking activities related to crypto and other emerging technologies. The decision was announced in a short statement released by the central bank on Friday, August 15, 2025.

Meanwhile, the program was created under Vice Chairman Michael Barr during the Biden administration. It was designed to strengthen oversight of banks involved in digital asset services following the collapse of Silicon Valley Bank, Silvergate Bank, and Signature Bank in early 2023. Those failures brought attention to the banking sector’s exposure to crypto-related businesses.

Crypto Oversight Returns to Standard Supervision

With the closure of the program, the Federal Reserve confirmed that monitoring of banks’ crypto-related activities will now be managed through regular supervisory channels. The agency stated that its understanding of digital asset risks has improved over the past two years, making a dedicated group unnecessary.

According to the Fed’s statement, the agency has “strengthened its understanding of those activities, related risks, and bank risk management practices.” As a result, it will no longer maintain a separate supervisory structure for such matters.

Regulatory Shift During Trump’s Second Term

This move is part of a broader shift in regulatory approach under the current administration. Since the start of President Donald Trump’s second term, federal banking agencies have scaled back specific rules aimed at crypto oversight.

Earlier this year, the Federal Reserve withdrew a guidance requiring banks to get pre-approvals before engaging in digital asset services. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation made similar adjustments. These changes allow banks to operate under standard risk-management guidelines without added restrictions for crypto activities.

Industry and Political Pressure Influence Oversight Changes

The crypto sector and some lawmakers have criticized past oversight efforts, claiming they were part of a campaign to block digital asset companies from banking services. This theory, often referred to by critics as “Operation Chokepoint 2.0,” gained attention following several high-profile bank failures.

Supporters of the crypto industry, especially among Republican lawmakers, have called for less federal interference. Under the Trump administration, banking regulators, including the Fed, have shifted toward more neutral ground. Still, the central bank emphasized that it will continue its supervisory role under standard procedures.

The Fed has not shared further details about internal restructuring or staff changes related to the closure of the program.