30th March 2025 > > FDIC & CFTC

tl;dr

FDIC rescinds a key plank of Operation Choke Point 2.0. As does the CFTC.

Market Snap

Market Wrap

The Trump disruption continues to weigh on risk markets, amplified in cryptos of course. The probability of rate cuts in the US are rising, with increasing talk of recession fears. That is not why Trump was elected though he seems to genuinely believe that tariffs are good for the US, in contrast to most other people. Until we have clarity on that point it is hard to see any meaningful improvement in market sentiment, with a significant risk of further downside.

Curious Cryptos’ Commentary – Another obstacle to crypto adoption is torn down

Following a recent hearing at the Financial Committee titled “Operation Choke Point 2.0: The Biden’s Administration’s Efforts to Put Crypto in the Crosshairs”

(https://www.curiouscryptos.com/post/5th-february-2025-regulatory-revolution-el-salvador), the CCC made the request that “… one of the outcomes of this hearing will be explicit instructions to banks that they can provide crypto services to their clients.”

Which is exactly what has happened, to the delight of us all.

Previously, the Federal Deposit Insurance Corporation (FDIC) had instructed banks to notify the agency prior to engaging in crypto-related activities, which had been severely curtailed by the ridiculous SAB 121 which effectively prevented regulated institutions from providing crypto custodial services. But that wasn’t all – the agency insisted it had to pre-approve such activities, which frankly wasn’t going to happen whilst Operation Choke Point 2.0 was in full swing.

On Friday, the FDIC reversed its previous stance:

https://www.fdic.gov/news/financial-institution-letters/2025/fdic-clarifies-process-banks-engage-crypto-related

The key sentence is this:

“In contrast to FIL-16-2022, which established a prior notification requirement specific to crypto-related activities, this FIL clarifies that FDIC-supervised institutions may engage in permissible crypto-related activities without receiving prior FDIC approval.”

FDIC Acting Chairman Travis Hill took aim at his predecessors:

“With today’s action, the FDIC is turning the page on the flawed approach of the past three years. 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.”

Every time one of these regulatory barriers is dismantled, the banking industry receives yet more encouragement to develop and grow crypto products for its clients.

Curious Cryptos’ Commentary – And again

On the same day, the Commodity Futures Trading Commission (CFTC) issued its own clarifying letter:

https://www.cftc.gov/PressRoom/PressReleases/9060-25

This development withdrew an earlier instruction that placed crypto derivatives into their own special category, one that was more stringent and placed greater demands than for derivatives on other assets or securities:

“… determined to withdraw the advisory to ensure that it does not suggest that its regulatory treatment of digital asset derivatives will vary from its treatment of other products.”

In just two months we have seen a complete re-drawing of the regulatory landscape in the US.

Now, we will find out if, how, and when, TradFi and cryptos can truly work together, which is a very exciting prospect indeed.