The Federal Reserve has ended its regulatory program targeting cryptocurrencies and distributed ledger technology

The US Federal Reserve on Friday shut down its "New Type of Business Activity" regulatory programme set up in 2023 to "ensure that the risks associated with innovation are properly addressed", the regulator said at the time of its launch. The programme is focused on distributed ledger technology (DLT), crypto assets, banks supporting the crypto space and complex technology-driven partnerships between banks and non-banks.
The Fed said it now had a better understanding of the risks involved so that the activities could be part of its regular regulatory process. In April, the Fed also withdrew several regulatory letters on cryptocurrencies and distributed ledger technology, including one that required a "no objection letter" to be obtained before the activities could start.
The project's restrictive regulatory approach has had a real impact on blockchain banking initiatives. According to a Freedom of Information request filed with the Federal Deposit Insurance Corporation (FDIC), the project hindered the launch of the "USDF Consortium" - which was designed to promote interbank payments between community banks, but eventually abandoned the plan due to blockages. And the consortium is not alone in having such goals (promoting blockchain interbank payments).