The Federal Reserve has ended the special supervisory program it created to monitor banks’ crypto, fintech and other technology-driven activities. The change moves those risks into the central bank’s standard supervisory process rather than removing them from examination.
The Board announced the decision on August 15, 2025, and rescinded the 2023 supervisory letter that established the Novel Activities Supervision Program. It said its supervisors had strengthened their understanding of the activities, their risks and banks’ risk-management practices sufficiently to integrate that work into ordinary supervision.
For payments companies and their bank partners, the distinction matters. The program’s closure eliminates a dedicated supervisory structure, but the underlying arrangements remain visible to examiners. Banks still have to be able to explain how a fintech or digital-asset product fits their risk appetite, how the parties divide control responsibilities and how failures would be contained.
What the special program covered
The withdrawn framework focused on four areas with direct payments implications: complex technology-driven partnerships between banks and nonbanks; crypto-asset activity; projects using distributed-ledger technology that could significantly affect the financial system; and concentrated banking services provided to crypto companies and fintechs.
That scope reached well beyond speculative trading. A bank can supply account access, settlement, custody, reserve management or other infrastructure to a nonbank that owns the customer interface. Such arrangements can split control over onboarding, transaction monitoring, ledger records, complaints and operational recovery across several organizations. Supervisory structure therefore affects how quickly problems are identified and who must produce evidence when examiners ask how the service works.
The 2023 program was designed to add specialized expertise while operating through existing supervisory teams. The Fed’s 2025 decision reverses the organizational overlay, not the conclusion that these activities can create safety-and-soundness risks.
Operational impact for banks and payment firms
The immediate compliance consequence is a change in supervisory channel. A bank should no longer expect the dedicated novel-activities program to be the organizing layer for these reviews. Instead, the same products and partnerships may be assessed by the institution’s normal supervisory team, drawing on the expertise the Fed says it developed during the program.
That makes internal consistency more important, not less. Product, compliance, legal, technology and treasury teams need a common description of transaction flows, customer ownership, settlement timing, liquidity dependencies and the controls operated by each third party. If those accounts differ, moving the review into ordinary supervision does not cure the gap; it can expose it across a broader examination.
Payment firms that depend on a regulated bank should also avoid treating the announcement as blanket regulatory approval. The Fed did not say the activities were risk-free, exempt them from existing law or guarantee access to banking services. It said they would be monitored through the normal supervisory process.
A broader policy shift, with limits
Sullivan & Cromwell, in an August 18 analysis, placed the decision alongside other 2025 moves by U.S. banking regulators that reduced special procedural barriers for permitted crypto activity. The firm noted that federal regulators had separately removed requirements for banks to obtain prior supervisory non-objection before engaging in permitted crypto-asset activities.
That context supports viewing the Fed’s decision as a normalization of supervisory treatment. It does not establish that every stablecoin, custody, ledger or bank-fintech arrangement is permissible. The legal authority for a specific activity, the risks created by its design and the quality of its controls remain separate questions.
Accountability does not disappear with the program
The main accountability risk is interpretive: management may hear “program ended” while supervisors mean “oversight integrated.” If a bank reduces governance or documentation on that assumption, responsibility remains with the bank and its executives when a partner failure, transaction-monitoring weakness, liquidity shortfall or ledger breakdown harms customers or threatens the institution.
Boards and senior managers should therefore ask a concrete question before approving a novel payment arrangement: could the bank reconstruct the customer, money and data flows, identify the responsible control owner and continue or safely unwind the service if the nonbank failed? The Fed’s announcement changes which supervisory structure may ask that question. It does not make the answer less consequential.