The US Federal Reserve has removed a 2023 guidance that restricted how Fed-supervised banks, including uninsured ones, interacted with cryptocurrencies. This change reflects a positive shift by US regulators towards digital assets. The guidance prevented uninsured banks from offering crypto services, but the Fed says the financial system has evolved since 2023.

A master account with the Fed allows financial institutions to hold balances directly with the US central bank and access core payment systems. This decision by the Fed to withdraw the outdated 2023 guidance is seen as a positive move for innovation in the banking sector, particularly in relation to cryptocurrencies.

The Federal Reserve has introduced new guidance to provide a formal pathway for both insured and uninsured banks under its supervision to explore innovative activities like cryptocurrencies. This move aims to ensure that the banking sector remains safe, while also promoting modernization, efficiency, and effectiveness, according to Fed Vice Chair Michelle Bowman.

Fed Governor Michael Barr dissented to the decision to withdraw the 2023 guidance, arguing that equal treatment among banks is vital to maintaining a level playing field and preventing regulatory arbitrage. Barr, who has been linked to Operation Chokepoint 2.0, a federal effort to debank crypto companies, has also advocated for responsible stablecoin regulation in the past.

Read more at CoinTelegraph: Fed Opens Pathway for Banks to Engage with Crypto