Fed Scraps Restrictive SR 23-8 Guidance; Opens Banking Rails to Crypto

The Federal Reserve formally withdrew its restrictive 2023 policy statement today, effectively ending the framework that has limited crypto banking access. In a sharp pivot, the central bank rescinded the 2023 policy on novel activities, replacing it with a framework that allows both insured and uninsured state member banks to engage in “innovative activities,” including crypto custody and stablecoin issuance, provided they meet risk management standards.

The Pivot

This is a complete structural reversal. The 2023 policy, issued during the post-FTX regulatory freeze, forced banks to limit their activities to those permissible for national banks, a process industry lawyers described as a “pocket veto.” The Fed explicitly stated today that the old rules were “outdated” and that its “understanding of innovative products and services have evolved.”

The Board is creating a pathway for responsible, innovative products and services, ensuring the banking sector remains safe and sound while also modern.

Institutional Implications

The primary beneficiary of this policy shift is the state-chartered banking sector, specifically Wyoming Special Purpose Depository Institutions (SPDIs) like Custodia Bank. Previously, the Fed used the 2023 policy to justify denying master accounts to uninsured crypto-native banks. The new policy expressly opens the door for these institutions to apply for access without an automatic blockade, a move likely to force a settlement or moot ongoing litigation in the 10th Circuit.

Bitcoin (BTC) held steady at $86,650 following the announcement, as the market had largely priced in regulatory relief under the current administration. The move aligns the Fed with the OCC and FDIC, both of which have recently signaled similar pivots to accommodate the Trump administration’s pro-digital asset mandate.