In a notice released on Friday, August 15th, 2025, the United States Federal Reserve announced that it will be discontinuing its novel activities supervision program, which was introduced in 2023, to monitor certain banks’ crypto and fintech activities. With the oversight program now closed, the Federal Reserve will now monitor bank and fintech activities under its normal supervisory process.
Overview of the Oversight Program
In August 2023, the U.S. Federal Reserve announced the Novel Activities Supervision Program (NASP) to supervise activities in the banking industry in relation to crypto, stablecoins, and blockchain technology. At the time, the Federal Reserve Board had a hard approach to cryptocurrency. Even with tougher rules, retail investors kept showing strong interest in altcoins, often checking guides on the best altcoins to buy now as they searched for options outside Bitcoin.
This “crypto boom”, however, led to many challenges in the banking sector, and to curb this, the board introduced the NASP, which would dedicate itself to overseeing banking activities as they relate to all things cryptocurrency. The program was meant to help complement the already existing standard supervisory process. Banks were required to report all their crypto-related activities and also undergo special reviews. All of these were to help reduce risk and ensure that banks carrying out crypto transactions had the right measures in place.
However, two years after introducing the program, the board announced its decision to shut it down, stating that it had gained an adequate understanding of the risks associated with the sector. The board will incorporate all the knowledge gained from the NASP into its standard supervisory process, as all bank and fintech activities will now be monitored under the regular process.
This move shows that the board is taking a softer approach towards crypto transactions and the activities of fintech companies. It also falls in line with President Donald Trump’s agenda of making America the biggest crypto hub in the world. By easing regulations surrounding crypto transactions, the sector will become more appealing to innovators and investors who can help boost the crypto economy in America.
It also follows earlier moves by the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), where they withdrew letters telling banks to seek approval before engaging in crypto and stablecoin activities. The Securities and Exchange Commission (SEC) has also withdrawn investigations into crypto companies.
Implications For Banks
Closing down the oversight program has given banks more flexibility to experiment without the extra layer of scrutiny. Banks can now freely partner with fintechs and integrate crypto into their services. This could also see banks expand to stablecoin payments and other forms of digital asset payments. However, it still comes with a level of risk. Regulators would need to be vigilant in monitoring these activities under standard protocols. Banks must also show a great deal of internal control while ensuring they apply sound risk management practices.
Implications for Crypto and Fintech Firms
For fintech and crypto firms, this could mean fewer barriers when entering partnerships with traditional banking institutions. Previously, investigations by the Federal Reserve Board have made this difficult and frustrating, but now, collaborating will most likely become easier. This could open more room for funding and innovation between the finance and crypto industries. To ensure that these partnerships work seamlessly, banks and fintech companies would need to pay more attention to consumer protection, be transparent, and comply with government regulations.
Market and Industry Reactions
Many industry experts see this as a sign to integrate crypto into the banking sector. For traditional banks and fintech firms, it opens a channel to collaborate and provide innovative services to their customers. Banks no longer see crypto as a risk but a part of their business. However, many analysts warn that companies need to be well aware of the risks that come with it.
In a statement, Ian P. Moloney, Senior VP and Policy & Regulatory Affairs Head at the American Fintech Council (AFC), said that when the NASP started, it helped banks innovate responsibly while serving their customers. Now that the program has ended, the AFC welcomes the change and looks forward to working with the Federal Reserve to guide regulators on new technologies and how to manage the risks they bring.
Combining this with the GENIUS Act, the One Big Beautiful Act, and solid measures of transparency and consumer protection, cryptocurrency could soon be a huge part of the finance sector in America, which is exactly what President Trump is aiming for.
