Federal authorities reject oversight program for innovative activities
The Federal Reserve has announced a significant shift in its approach to overseeing cryptocurrency and fintech activities in banks. The Novel Activities Supervision Program (NASP), a temporary, specialized program launched in 2023 to address emerging risks from banks' crypto custody, stablecoin involvement, and tokenization activities, has been discontinued as of August 15, 2025.
The move comes as a result of the Fed's improved understanding of crypto-related risks and a desire to reduce specialized compliance burdens on banks while aligning with broader government policies promoting fintech integration. This decision aims to boost the competitive position of U.S. banks in digital asset markets, moving away from a temporary, specialized oversight mechanism towards routine supervision of these activities.
Ian P. Moloney, the senior vice president and head of policy and regulatory affairs at the American Fintech Council, praised the Fed's decision, calling the NASP "critically important" for innovative banks. He also emphasized the importance of continued education of examiners on emerging technologies to ensure they can properly assess the risks associated with those technologies.
The withdrawal of the NASP does not imply a shift in stance on artificial intelligence by the Fed. In fact, the Trump administration has shown support for artificial intelligence, which is often associated with bank and fintech innovation. The Fed created the NASP nearly two years before its withdrawal, with the intention of using it to build upon and enhance its technical expertise to better understand novel activities, the novel manifestations of risks, and appropriate controls to manage such risks.
The decision to fold the NASP's functions into the Fed's general supervision activities reflects a normalization of digital assets within traditional banking operations. Industry experts and policymakers supporting this move argue it encourages greater institutional adoption and innovation, though some caution remains about potential long-term stability risks.
Moloney, in a statement, expressed respect for the Fed's decision and noted that the American Fintech Council is eager to work with Fed Vice Chair Michelle Bowman. The withdrawal of the NASP does not imply a shift in stance on fintech or cryptocurrency by the Fed, but rather a recognition of the maturation of these markets and the need for a more integrated approach to oversight.
In summary, the Federal Reserve has discontinued its Novel Activities Supervision Program (NASP) for cryptocurrency and fintech activities in banks, integrating crypto supervision into its standard banking regulatory framework. This move reflects a deregulatory approach aimed at fostering innovation and enhancing the competitive position of U.S. banks in digital asset markets, while maintaining ongoing risk vigilance.
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