Federal Reserve rescinds prior restrictions as FDIC advances stablecoin framework.

Washington | December 22, 2025 — The US Federal Reserve withdrew its 2023 guidance on crypto-asset activities for banks late last week. The move clears a path for supervised institutions to engage more freely with digital assets.

The Federal Reserve Board announced the rescission Friday. It targets the March 2023 supervisory letter that had limited banks’ exposure to crypto. Industry sources noted the change reflects evolving views on risk management.

Banking regulators had flagged crypto’s volatility and operational risks two years prior. That stance prompted pullbacks from firms like BNY Mellon and State Street. Traders in Singapore noted renewed interest from custody providers since the election.

The FDIC followed with its own proposal last week. It outlines a licensing path for stablecoin issuance under the GENIUS Act. Data reviewed by this publication shows over 20 supervised banks have sought preliminary approval.

Market participants said the dual announcements mark Washington’s clearest signal yet. European counterparts watch closely. The EU’s MiCA rules took effect this year, drawing US$50 billion in stablecoin deposits already.

Analysts in New York pointed to custody as the immediate focus. Bitcoin spot volume hit US$35 billion daily last week, per exchange data. Ethereum derivatives added another US$25 billion. Banks now assess compliant infrastructure.

The Fed’s letter reversal applies to all 38 supervised institutions. It stresses tailored supervision over blanket limits. Funds in London adjusted exposure last week, shifting from offshore wrappers to direct custody talks.

Stablecoins sit at the core of the FDIC plan. The proposal covers payment stablecoins backed 1:1 by reserves. Issuers would face federal oversight, separate from state money transmitter licenses.

According to people familiar with the matter, at least three regional banks tested stablecoin pilots earlier this year. Volumes stayed below US$100 million daily to avoid scrutiny. That changes now.

Asia-Pacific regulators take note. Hong Kong licensed three stablecoin issuers this month. Volumes there reached US$2 billion weekly. Singapore traders said US clarity could redirect flows stateside.

The GENIUS Act framework targets systemically important stablecoins first. Smaller issuers face lighter touch. Industry sources noted USDC and PYUSD volumes lead at US$40 billion combined daily circulation.

Bank balance sheets reflect caution still. Crypto-related assets total under 0.5% of US$25 trillion in deposits. Custody arms hold the bulk, at US$15 billion notional. That figure doubled since January.

Traders in Singapore noted options activity spiked 30% post-announcement. Bitcoin December expiry volumes hit US$12 billion. Ethereum calls outnumbered puts 3-to-1 at the US$4,000 strike.

The FDIC seeks comment through February. Final rules could land mid-2026. Market participants said timing aligns with Treasury’s broader digital asset review.

Europe balances ahead. MiCA compliance costs exchanges US$200 million annually, per filings. US banks weigh similar outlays against revenue potential. Funds in London said cross-border custody lags.

Analysts in New York track deposit growth. Stablecoin market cap holds at US$180 billion. Monthly issuance netted US$5 billion in November, led by USDC expansion.

The policy pivot lands amid steady markets. Bitcoin traded near US$89,000 Monday. Ethereum held US$4,100. Broader indices showed 1% gains across 200 tokens tracked.

Regulators coordinate quietly. The OCC issued parallel guidance on custody last month. Joint task forces meet weekly, sources said. Focus stays on reserves and redemption mechanics.

Banks test waters carefully. Pilot programs run through third-party processors. Daily settlement volumes reach US$500 million across five institutions, per data seen by this publication.

The shift reshapes infrastructure debates. Traditional rails handle 60% of stablecoin flows now. Blockchain settlement edges higher at 25%. Rest splits across hybrids.

Global volumes underscore scale. Daily crypto derivatives top US$150 billion. Spot adds US$80 billion. Stablecoins underpin 70% of trades, exchange reports show.

Washington’s moves ripple outward. Brazil and India eye similar frameworks. Japan’s FSA approved two stablecoin pilots last week. Alignment grows across G20.

The announcements cap a year of recalibration. Enforcement actions fell 40% from 2024 peaks. Policy clarity fills the gap, sources close to the process noted.

Disclaimer: Crypto assets are volatile and involve risk.
This content is published for informational purposes only.

Global Markets Desk | DECODE THE CRYPTO covers global cryptocurrencies,
regulation, and digital finance with an institutional
and macroeconomic focus.