The Federal Reserve has ended its dedicated “novel activities” supervision track and is moving crypto and fintech oversight back into routine exams. The Board also withdrew the 2023 supervisory letter that created the program. The message to banks is simple. Treat digital asset lines like any other material activity, meet safety and soundness standards, and expect exam teams to test controls inside normal cycles.
Field memo for banks
What changes today
Special handling is gone. Crypto custody, stablecoin interfaces, tokenization pilots, and bank–fintech partnerships now sit inside standard supervisory planning, scoping, and testing. Institutions will work with their existing supervisory teams rather than a separate specialist portfolio.
What does not change
Risk does not disappear. Examiners will still expect clear ownership, third-party oversight, liquidity risk management, and credible incident response. Misaligned incentives in bank–fintech arrangements, unresolved legal opinions, and weak wallet controls will remain findings.
Why it matters
Normalizing crypto inside routine exams lowers process friction for banks that already run mature controls. It also raises the bar for firms that relied on novelty to avoid deep testing. Execution discipline is now the differentiator.
Quick map of impact
Governance
Board and senior management need explicit risk appetite statements for digital assets. Materiality triggers should push crypto activities into the enterprise risk framework rather than live as side projects.
Compliance and legal
Confirm authority, disclosures, consumer compliance, and applicable state trust or money transmission touchpoints. Refresh opinions that referenced the old supervisory letter.
Treasury and liquidity
Stress collateral haircuts, settlement timing, and intraday liquidity paths for tokenized flows and stablecoin rails. Plan for market closure contingencies.
Information security
Segregate key material, restrict programmable surfaces in cold environments, and enforce allow-list withdrawals for institutional programs. Test incident drills that involve both crypto and traditional payment rails.
Third-party risk
Re-paper contracts with wallet and oracle vendors to include testing rights, change control, and independent attestation requirements. Scope concentration risk where a single custodian or fintech underpins multiple services.
Scenario map for the next 6 to 12 months
Base case
Banks with prior engagement move pilots toward production under standard exam cadence. Findings cluster around third-party oversight and model documentation.
Upside case
Clearer process unlocks more tokenization, custody, and payments work with larger clients. Fee and spread businesses benefit from enterprise sign-offs that were waiting for policy stability.
Downside case
A visible incident or disputed legal interpretation slows adoption. Agencies issue clarifications. Exam teams raise scope intensity and require remediation plans before growth.
Practical checklist for program owners
Name a single accountable executive for digital asset activities
Map every crypto or DLT use case to risk taxonomy and materiality thresholds
Update policies and procedures to reflect exam treatment under standard processes
Refresh third-party due diligence and add audit rights for wallet and data vendors
Rehearse cross-rail incident response that touches cards, ACH, wires, and on-chain rails
Document capital and liquidity impacts, including intraday monitoring
Prepare board reporting that shows controls maturity and residual risk in plain language
For European and UK readers
MiCA gives EU banks a harmonized path that already feels like business as usual. The U.S. shift lands closer to that posture, although technical standards and disclosure expectations still vary. UK firms will continue to operate under promotions and conduct rules, with prudential treatment evolving. Cross-border groups can now align playbooks more easily and avoid reinventing parallel processes for U.S. operations.
What developers and fintech partners should expect
Banks will push for stronger evidence from vendors. Expect requests for key ceremony artifacts, chain-of-custody logs, deterministic release pipelines, and independent pen-testing. Performance Service Level Objectives need to be explicit for on-chain components that can affect customer experience. If your product touches balance, settlement, or customer data, be ready for joint testing with the bank’s internal audit.
Bottom line
Policy has moved from exception management to normalization. The burden shifts from clearing a novelty gate to proving that crypto activities meet the same standards that govern every other material line of business. For disciplined programs this is a green light. For improvisation it is the end of the road.
