Fed Sunsets 2023 Crypto-Focused “Novel Activities” Bank Oversight Program

Ad-hoc regulatory task forces often appear after shocks—think the OCC’s 1994 “Derivatives SWAT team” post-Orange County—only to be absorbed once the novelty fades. The Fed’s rollback fits that century-long oscillation: crisis-driven oversight (Glass-Steagall 1933, Dodd-Frank 2010) gradually relaxes under economic and political pressure. By declaring crypto risks now manageable within ordinary exams, the Fed both normalizes digital assets and nods to a Trump administration narrative that extra scrutiny amounted to an “Operation Chokepoint 2.0.” The step may catalyze mainstream bank adoption of tokenized finance, but history warns that loosening bespoke guardrails—1999’s Gramm-Leach-Bliley being the oft-cited example—can sow systemic fragilities that surface a decade later. Whether this 2025 pivot empowers balanced innovation or plants seeds for the next liquidity crunch will matter long after today’s cryptocurrencies evolve into whatever form money takes in 2125.