On August 15, the Federal Reserve Board announced that it has rescinded its 2023 supervisory letter establishing the Novel Activities Supervision Program (NASP). The program had focused on overseeing banks’ involvement in crypto assets, distributed ledger technology, and fintech partnerships. The Fed explained that it has “strengthened its understanding” of these activities and will return to supervising them through the standard supervisory process.
According to the Fed, the decision reflects its view that dedicated supervision is no longer necessary now that knowledge gained from the program can be integrated into its standard supervisory process.
Putting It Into Practice: By framing the sunset of the NASP as a natural evolution rather than a retreat, the Fed highlighted its confidence in mainstream supervisory tools to address emerging risks in the crypto sector. For banks and fintechs, this reduces the perception of heightened regulatory barriers while maintaining the expectation that novel activities will face the same risk-based scrutiny as other banking functions. Market participants should remain mindful that the policy environment remains fluid, and future leadership could reintroduce more specialized oversight as technologies continue to evolve.
