Regulatory bodies urged to provide clear guidelines on cryptocurrency banking regulations, according to Coinbase's appeal.
In a significant move, the Federal Deposit Insurance Corporation (FDIC) is reevaluating its supervisory approach to crypto-related activities, signalling a shift towards more flexible, principles-based oversight. This change comes as part of a joint statement issued by the FDIC, the Office of the Comptroller of the Currency (OCC), and the Federal Reserve, which reaffirms that existing laws and prudential risk management principles govern crypto-asset safekeeping by banks.
The joint statement, released on July 14, 2025, provides principles-based expectations for banks to assess and manage risks associated with crypto custody. Banks offering these services must conduct thorough risk assessments, establish strong control environments, and dedicate sufficient technical resources to address the unique operational, legal, and compliance risks of crypto assets. Banks may provide these services either in fiduciary or non-fiduciary capacities, subject to the applicable laws and client agreements.
This regulatory pivot away from prescriptive regimes is a marked shift from earlier periods when certain interpretative guidance required banks to seek supervisory approval before engaging in crypto activities—those prior requirements were rescinded earlier in 2025.
The move towards more flexible oversight also coincides with legislative developments, such as the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, signed into law on July 18, 2025. This act establishes the first comprehensive federal regulatory framework specifically for payment stablecoins, aiming to promote financial stability, consumer protection, and innovation, reinforcing the role of the US dollar in digital markets.
While the GENIUS Act focuses on stablecoins and provides a new federal framework relevant to issuers, custodians, and banks, it complements but does not radically change the prudential supervisory approach to broader crypto custody services by banks.
Coinbase, one of several crypto firms that donated $1 million to President Donald Trump's inauguration campaign, has renewed calls on federal banking regulators to remove impediments limiting banks' abilities to offer cryptocurrency custody and execution services. Coinbase Chief Policy Officer Faryar Shirzad has requested that regulators confirm that banks are permitted to offer crypto custody and execution services either directly or through third parties, and that they remove roadblocks to crypto companies looking to partner with banks.
The FDIC is also working on replacing its Financial Institution Letter that warns about crypto-related activities. Acting Chair Travis Hill has ordered a comprehensive review of such communications, and the FDIC has recently released 175 documents linked to its supervision of banks that engaged in, or wanted to engage in, crypto-related activities.
This current regulatory environment reflects a cautious but clear framework encouraging banks to engage with crypto custody under prudent risk management rather than imposing restrictive barriers or novel regulatory burdens. The FDIC will engage with the President's Working Group on Digital Asset Markets, and President Donald Trump has been a vocal proponent of digital assets in the last year. However, spokespeople for the Fed, the FDIC, and the OCC declined to comment on the specifics of this shift in regulatory approach.
In a blog post accompanying the news, Shirzad wrote that clear, durable rules will benefit all stakeholders, including traditional banks, crypto companies, and consumers. He emphasized that banks should not be artificially restrained from using new technologies, including offering services through partnerships with crypto firms like Coinbase.
As the landscape of digital assets continues to evolve, it is expected that further developments in regulatory guidance will follow, aiming to strike a balance between innovation and risk management.
Technology plays a crucial role in the new regulatory approach towards crypto-related activities, as banks are expected to dedicate sufficient technical resources to address the unique operational challenges posed by crypto assets.
The move towards more flexible oversight by the Federal Deposit Insurance Corporation (FDIC) also allows banks to work in partnership with technology firms like Coinbase, as they navigate the evolving landscape of digital assets.
