FDIC’s Crypto Shake-Up: The Policy Shift No One Saw Coming

In a move that could redefine the future of digital finance in the U.S., the FDIC has finally flipped the script on crypto regulation, sending shockwaves through the banking sector.

On April 8, 2025, Acting Chairman Travis Hill addressed the American Bankers Association’s Washington Summit and dropped a bombshell: banks no longer need prior approval to engage in permissible crypto activities. That sentence marks a seismic shift in how the U.S. banking system views blockchain, digital assets, and innovation.

For years, banks operated under a cloud of uncertainty, discouraged from touching anything crypto-related due to regulatory bottlenecks. But that’s all changing—and fast.

From Roadblock to Runway

Hill made it clear that the FDIC’s updated policies are meant to reduce friction, not create more of it. The previous requirement—banks having to notify the FDIC before engaging in crypto—has now been scrapped.

“FDIC-supervised institutions may engage in permissible crypto-related activities without receiving prior FDIC approval,” Hill stated. This puts crypto activities on par with other bank-approved services, providing clarity that the industry has long demanded.

But that’s not all.

Hill signalled that the agency is exploring even broader definitions of what’s permissible—from custody services and stablecoin reserves to operating validator nodes on public blockchains. These are activities other nations have already embraced, and the U.S. may now follow suit—with guardrails in place.

“While a complete prohibition on interacting with public chains is clearly too restrictive, what guardrails would be prudent?” Hill asked, sparking a policy conversation the industry has long awaited.

Public Chains, Private Gains

The most striking part of Hill’s speech was his openness to banks working with public blockchains—a major departure from the cautious tone regulators have struck for years.

Historically, U.S. regulators have restricted interaction with public, permissionless networks due to concerns over privacy, risk, and control. But the FDIC now appears ready to challenge that position, focusing instead on setting standards that allow safe participation rather than blocking it entirely.

This change could unleash a new wave of innovation, particularly in tokenized banking, DeFi integrations, and blockchain-based compliance frameworks.

Stablecoins Get a Regulatory Spotlight

The FDIC isn’t stopping at crypto infrastructure. Hill also addressed stablecoin legislation currently moving through Congress, pointing out the urgent need for clarity around liquidity risk, cybersecurity, and compliance in tokenized deposits.

He proposed a critical review of pass-through deposit insurance rules, suggesting that the FDIC is working toward a future where stablecoin reserves are treated just like traditional deposits. “Deposits are deposits, regardless of the technology or recordkeeping deployed,” he said.

This has major implications for how banks structure tokenized products, protect customers, and report risk.

Hill also warned of smart contracts that could automatically withdraw funds in the event of a bank failure—a scenario that could disrupt resolution protocols and raise costs. It’s a sign that even as the FDIC opens doors, it’s keeping one eye on systemic safety.

A New Era for Crypto and Banking

The message from the FDIC is loud and clear: the era of vague rules and passive resistance is over. Instead, the agency is crafting a framework that encourages responsible experimentation, lowers entry barriers, and aligns the U.S. banking system with the realities of modern finance.

What comes next could be explosive: banking services that run on blockchains, crypto-backed products issued by FDIC-insured institutions, and perhaps even stablecoin systems that blend seamlessly with legacy infrastructure.

One thing’s for sure—this shift wasn’t just a policy update. It was a turning point. And the entire digital finance world is watching.