Federal Reserve Revises Policy to Encourage Innovation in Banking

According to Foresight News, the Federal Reserve has withdrawn a restrictive policy statement issued in 2023 and introduced a new policy statement. The previous policy limited state member banks to activities explicitly permitted for national banks, hindering the development of cryptocurrency-related services, particularly custody, tokenization, and stablecoin integration. The new policy statement opens avenues for state member banks regulated by insurance committees to engage in certain innovative activities, regardless of insurance status. Federal Reserve Vice Chair for Supervision Michelle Bowman stated that new technologies enhance efficiency for banks and offer better products and services to customers. By creating pathways for responsible innovation, the board is helping ensure that the banking industry remains safe and sound while modernizing and operating efficiently. Earlier reports from Foresight News indicated that the Federal Reserve had announced the revocation of its regulatory plan for bank crypto and fintech activities in August of this year.