Federal Reserve Cracks Down on Banks Holding Large Crypto ETF Holdings: What You Need to Know

The Federal Reserve is signaling a cautious approach to banks significantly increasing their holdings of cryptocurrency ETFs. While the digital asset landscape evolves rapidly, regulators are carefully weighing the risks and benefits of widespread bank involvement. Recent developments indicate a nuanced, rather than universally welcoming, stance.

Hace 3 días NEW YORK, May 28 (Reuters) reported that Big U.S. banks are internally discussing expanding into cryptocurrencies due to perceived stronger regulatory endorsements. However, this enthusiasm may be tempered by the Federal Reserve's ongoing assessments.

Rolling Back Biden-Era Guidance: A Step Forward, But Not a Green Light

It's true that The Federal Reserve, FDIC, and OCC are rolling back Biden-era crypto guidance, easing restrictions on banks engaged in digital asset activities. New policies remove Federal Reserve Governor Doesn’t Want Large Crypto ETF Holdings From Banks. This withdrawal of previous restrictions might seem like a clear signal for banks to jump into crypto ETFs. However, it's more accurately interpreted as a recalibration of regulatory oversight, not necessarily an endorsement of unlimited exposure.

The Federal Reserve's Concerns: Stability and Contagion

The Federal Reserve's hesitancy stems from genuine concerns about the stability of the banking system. Key issues being examined include:

• Susceptibility of stablecoins to run risk, creating potential deposit outflows for banking organizations that hold stablecoin reserves. A sudden loss of confidence in a stablecoin could trigger a bank run, impacting liquidity and potentially threatening the entire financial system.
• Contagion risk within the crypto-asset sector. The interconnectedness of the crypto market means that a collapse in one area could quickly spread to others, including banks with significant crypto ETF holdings.

On Ap, the Federal Reserve became the third federal banking agency to lift Biden-era restrictions and regulatory notification requirements on banking organizations’ involvement in The Federal Reserve Board on Thursday announced the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes. While banks gain more flexibility, this doesn't negate the need for robust risk management and regulatory scrutiny.

The Federal Reserve's Supervisory Framework: SR Letter 22-6

In 2025, the digital asset market saw a landmark decision to kick off the federal reserve system. washington, d.c. . division of supervision . and regulation. division of consumer and community affairs . sr 22-6 . ca 22-6 withdrawn. august In 2025, the Federal Reserve issued SR Letter 22-6, 13 which addressed supervisory expectations and procedures for engagement by banking organizations. While portions of SR 22-6 have been withdrawn, the core principles of responsible engagement with digital assets remain. Banks are expected to demonstrate a thorough understanding of the risks involved and implement appropriate controls to mitigate them.

The Future of Banks and Crypto ETFs

The Federal Reserve's approach to banks holding large crypto ETF holdings is likely to remain cautious and data-driven. As the crypto market matures and regulatory frameworks evolve, we can expect further clarifications and adjustments. However, for now, banks contemplating significant exposure to crypto ETFs should proceed with caution, prioritizing risk management and maintaining close communication with regulators.