Banks under FDIC supervision can now handle crypto without getting permission first. On Friday, the FDIC released Financial Institution Letter FIL-7-2025, which cancels a 2022 rule that required banks to get approval before touching anything crypto-related. The new rule says banks can engage in crypto activities that are legal, but they need to handle the risks on their own.

The update came straight from Washington, where the FDIC announced it was done with the last three years of what it now sees as a flawed method. Acting Chairman Travis Hill said the agency is ready for a new direction.

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years,” Travis said in a written statement. “I expect this to be one of several steps the FDIC will take to lay out a new approach for how banks can engage in crypto- and blockchain-related activities in accordance with safety and soundness standards.”

FDIC plans to issue more crypto guidance soon

The FDIC said it would keep working with the President’s Working Group on Digital Asset Markets, and promised to release more guidance later to help banks better understand what they’re allowed to do with crypto. It also said it would join forces with other banking agencies to replace older rules with new regulations or updated guidance.

The new policy says banks can work with crypto, blockchain, and other tech as long as it’s within the law and the banks properly manage the risks. Banks don’t need to send in a form or get permission. They just need to make sure they’re staying within what the law allows.

Travis didn’t say when more changes would drop, but said this one was just the beginning. The FDIC has made it clear it’s moving away from the past restrictions and plans to build something new that still follows banking standards but allows more room for crypto work.

The update matters because banks and crypto firms have been calling out regulators for blocking relationships and delaying deals. Many crypto companies say they’ve been frozen out of banking entirely because of the old rules. With this change, that door is finally cracking open.

But even with this new guidance, crypto is still caught in a larger fight happening in Congress.

Tim Scott wants regulators banned from using reputational risk

Senator Tim Scott, who leads the Senate Banking Committee, said regulators have been hiding behind a concept called reputational risk to keep banks from doing business with some industries, including crypto. On March 6, Tim plans to introduce a bill to ban regulators from using reputational risk as a way to judge banks. Eleven other Republican senators are backing his bill.

Tim said in a written statement, “It’s clear that federal regulators have abused reputational risk by carrying out a political agenda against federally legal businesses.” He said regulators are pushing banks to avoid entire industries just to avoid bad press, even when those industries are fully legal.

The issue has gotten louder after complaints from crypto companies and political figures, including President Trump, who is now back in the White House. Trump blasted Bank of America and JPMorgan Chase for closing the accounts of conservatives, calling out what he described as discrimination. That fueled more complaints that banks are using reputational risk as an excuse to shut out certain groups and businesses.

Tim’s bill isn’t the only one going after this problem. Senator Kevin Cramer from North Dakota, who co-sponsored Tim’s bill, introduced a separate bill that would require banks to serve all customers who are legal and creditworthy. That bill would force banks to stop cherry-picking customers based on image or politics.

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