Community Banks and Crypto-Assets Is It Time To Start Exploring? By IAN F. MCDOWELL, CPA, Principal, Audit and Assurance, S.R. Snodgrass PC Speaking recently with our many community bank clients, we’ve seen a significant increase in questions and concerns regarding the increased presence of crypto-assets business models. The general sentiment is “I know it’s being discussed, but I’m not sure how the regulators will view this or how it will affect the current operations of my community bank.” As these questions continue to increase, this article has been prepared to provide some insights into the FDIC’s current regulatory developments, as well as some practical information on how community banks can start to explore this topic at their own organization. Let’s start with how the regulatory landscape has changed over the last few years. Between April 2022 and March 2025, the FDIC issued two brief Financial Institution Letters on this topic: FIL-16-2022 and FIL-7-2025. It doesn’t take much reading between the lines to identify an apparent shift from a precautionary, pre-notification stance on banks’ crypto-related activities (FIL-16-2022) to a permissions-based, risk-management stance that rescinds the prior notice requirement (FIL-7-2025). In the 2022 letter, the FDIC required banks to notify the agency before engaging in any crypto-related activity and emphasized evolving safety and soundness, consumer protection, and financial stability risks. Following, in the 2025 letter, the FDIC affirmed that FDIC-supervised institutions may engage in permissible crypto-related activities without prior FDIC approval, provided risks are adequately managed and activities comply with applicable law. Additionally, in February 2025, the FDIC published 25 “pause letters,” which were sent to banks between October 2018 and January 2025, discussing the FDIC’s concerns with their crypto-related activities. In the context of the release, Acting FDIC Chairman Travis Hill commented about the FDIC’s position evolving to provide a pathway forward for banks by saying, “Looking forward, we are actively reevaluating our supervisory approach to crypto-related activities. This includes replacing Financial Institution Letter (FIL) 16-2022 20 WEST VIRGINIA BANKER
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