The Federal Reserve Board withdrew a 2023 policy statement and issued a new policy statement on the treatment of certain banks that facilitate responsible innovation.
In 2023, the Board issued a policy statement that limited board-supervised state member banks to the same activities permissible for banks supervised by the other federal bank regulatory agencies. The policy statement included a discussion of how the policy would apply to certain innovative products and services.
Since the policy statement was published, the financial system has evolved, as has the Fed’s understanding of innovative products and services. As a result, the Fed declared that the 2023 policy statement is no longer appropriate and it has been withdrawn.
“New technologies offer efficiencies to banks and improved products and services to bank customers,” Vice Chair for Supervision Michelle Bowman said. “By creating a pathway for responsible, innovative products and services, the Board is helping ensure that the banking sector remains safe and sound while also modern, efficient, and effective.”
The new policy statement creates an avenue for both insured and uninsured Board-supervised state member banks to engage in certain innovative activities.
“The 2023 Policy Statement treated insured and uninsured state member banks the same, taking the position that the same activity presenting the same risks should be subject to the same regulation – regardless of whether the bank is insured,” the Fed board memo states. “The 2025 Policy Statement retains this principle, but also articulates the reciprocal principle that a different activity, presenting different risks, should be subject to different regulation. In alignment with this second principle, the 2025 Policy Statement acknowledges that uninsured state member banks may be permitted by the Board to engage in activities as principal that are impermissible for insured state member banks, provided that such activities are conducted in a manner consistent with bank safety and soundness and preserving the stability of the U.S. financial system.”
In addition, the new policy provides guidance to uninsured state member banks and uninsured state-chartered bank applicants for membership who may seek to engage in activities that are not otherwise permissible for insured state-chartered banks.