Policy Statement on Section 9(13) of the Federal Reserve Act

<RULE> FEDERAL RESERVE SYSTEM <CFR>12 CFR Part 208</CFR> <DEPDOC>[Docket No. OP-1876]</DEPDOC> <RIN>RIN 7100-AH14</RIN> <SUBJECT>Policy Statement on Section 9(13) of the Federal Reserve Act</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Board of Governors of the Federal Reserve System. <HD SOURCE="HED">ACTION:</HD> Final rule; rescission of a policy statement; issuance of a policy statement. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Board of Governors of the Federal Reserve System (Board) is rescinding its 2023 policy statement interpreting section 9(13) of the Federal Reserve Act (FRA) (2023 Policy Statement), which set out a presumption for how the Board would exercise its authority under that provision and elaborated on supervisory expectations at that time related to “novel and unprecedented” activities. The Board is also withdrawing from the record the <E T="02">Supplementary Information</E> that accompanied the 2023 Policy Statement, which discussed specific crypto-asset activities. The Board is replacing the 2023 Policy Statement with a new policy statement on section 9(13) of the FRA, which is designed to facilitate innovation by state member banks in a manner that is consistent with bank safety and soundness and preserving the stability of the U.S. financial system. The new policy statement also provides guidance to uninsured state member banks and uninsured state-chartered bank applicants for membership who may seek to engage in activities as principal that are not permissible for insured state member banks. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule and policy statement is effective on December 22, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Asad Kudiya, Associate General Counsel, (202) 475-6358 and Kelley O'Mara, Special Counsel, (202) 430-0911, Legal Division; or Juan Climent, Deputy Associate Director, (202) 872-7526 and Jeff Ernst, Manager, (202) 369-9439, Division of Supervision and Regulation, Board of Governors of the Federal Reserve System, 20th Street and C Streets NW, Washington, DC 20551. For users of TTY-TRS, please call 711 from any telephone, anywhere in the United States. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> Under section 9(13) of the Federal Reserve Act (FRA), the Board of Governors of the Federal Reserve System (Board) “may limit the activities of State member banks and subsidiaries of State member banks in a manner consistent with section 24 of the Federal Deposit Insurance Act [(FDIA)].”  <SU>1</SU> <FTREF/> Section 24 prohibits an insured State bank from engaging “as principal in any type of activity that is not permissible for a national bank unless—(A) the [Federal Deposit Insurance Corporation (FDIC)] has determined that the activity would pose no significant risk to the Deposit Insurance Fund; and (B) the State bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate Federal banking agency.”  <SU>2</SU> <FTREF/> In 2023, the Board issued a policy statement interpreting section 9(13) (2023 Policy Statement), setting out a presumption for how the Board intended to use its authority under the provision and elaborating on supervisory expectations at that time regarding “novel and unprecedented” activities. <SU>3</SU> <FTREF/> <FTNT> <SU>1</SU>  12 U.S.C. 330 (as amended by Federal Deposit Insurance Corporation Improvement Act of 1991 § 303(b), Public Law 102-242, 105 Stat. 2236, 2353). </FTNT> <FTNT> <SU>2</SU>  12 U.S.C. 1831a(a). <E T="03">See</E> 12 CFR part 362. </FTNT> <FTNT> <SU>3</SU>  88 FR 7848 (Feb. 7, 2023); 12 CFR 208.112. </FTNT> At this time, the Board has concluded that it is appropriate to rescind the 2023 Policy Statement and replace it with a new policy statement (2025 Policy Statement) describing the Board's intention to interpret section 9(13) of the FRA in a manner designed to facilitate innovation by state member banks, consistent with bank safety and soundness and preserving the stability of the U.S. financial system. The Board is also withdrawing from the record portions of the <E T="02">Supplementary Information</E> (2023 Preamble) discussing specific crypto-asset activities. The 2025 Policy Statement (i) articulates the Board's commitment to the principle of “same activity, same risks, same regulation” and the reciprocal principle of “different activity, different risks, different regulation” in a manner designed to facilitate innovation by state member banks, and (ii) provides further guidance to uninsured state member banks and uninsured state-chartered bank applicants for membership who may seek to engage in activities as principal that are not permissible for insured state member banks. <HD SOURCE="HD1">II. Rescission of the 2023 Policy Statement</HD> In January 2023, the Board published the 2023 Policy Statement, <SU>4</SU> <FTREF/> which set out a rebuttable presumption that the Board would exercise its discretion under section 9(13) of the FRA to limit the authority of state member banks to engage as principal in only those activities that are permissible for national banks—in each case, subject to the terms, conditions, and limitations placed on national banks with respect to the activity—unless those activities are permissible for state-chartered banks by federal statute or under part 362 of the FDIC's regulations. The 2023 Policy Statement also (i) reiterated to state member banks that legal permissibility is a necessary, but not sufficient, condition to establish that a state member bank may engage in a particular activity; (ii) reminded state member banks that they must at all times conduct their business and exercise their powers with due regard to safety and soundness, including by having in place appropriate internal controls and information systems; and (iii) highlighted particular risks associated with, and supervisory expectations for, “novel and unprecedented” activities. Furthermore, the 2023 Preamble discussed how the 2023 Policy Statement would presumptively apply to particular sets of facts related to certain crypto-asset activities at the time. <FTNT> <SU>4</SU>   <E T="03">See</E> Press Release: Federal Reserve Board issues policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status (Jan. 27, 2023), <E T="03">available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230127a.htm.</E> </FTNT> The 2023 Policy Statement was part of a series of Board or Board staff issuances in 2022 and 2023 related to crypto-asset activities and supervisory expectations for such activities. Recently, those issuances have been rescinded or withdrawn. <SU>5</SU> <FTREF/> The Board believes these statements are no longer appropriate given its evolving understanding of the risks of the crypto-asset sector and its desire to facilitate innovation in a manner consistent with safety and soundness and preserving the stability of the U.S. financial system. Similarly, at this time, the Board has determined it should rescind the 2023 Policy Statement in its entirety, including related guidance in the 2023 Preamble. <FTNT> <SU>5</SU>   <E T="03">See, e.g.,</E> Press Release: Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities (Apr. 24, 2025), <E T="03">available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250424a.htm;</E> Press Release, Federal Reserve Board announces it will sunset its novel activities supervision program and return to monitoring banks' novel activities through the normal supervisory process (Aug. 15, 2025), <E T="03">available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250815a.htm.</E> </FTNT> <HD SOURCE="HD1">II. 2025 Policy Statement</HD> The Board continues to believe it is beneficial to provide transparency to the public regarding its interpretation of section 9(13) of the FRA, as well as how it intends to use its authority under the provision. Therefore, the Board is replacing its 2023 Policy Statement with the 2025 Policy Statement. <HD SOURCE="HD2">A. Legal Authority</HD> Under section 9(13) of the Act, the Board “may limit the activities of State member banks and subsidiaries of State member banks in a manner consistent with section 24 of the [FDIA].”  <SU>6</SU> <FTREF/> Section 24 prohibits an insured State bank from engaging “as principal in any type of activity that is not permissible for a national bank unless—(A) the [FDIC] has determined that the activity would pose no significant risk to the Deposit Insurance Fund; and (B) the State bank is, and continues to be, in compliance with applicable capital standards prescribed by the appropriate Federal banking agency.”  <SU>7</SU> <FTREF/> <FTNT> <SU>6</SU>  12 U.S.C. 330 (as amended by Federal Deposit Insurance Corporation Improvement Act of 1991 § 303(b), Public Law 102-242, 105 Stat. 2236, 2353). </FTNT> <FTNT> <SU>7</SU>  12 U.S.C. 1831a(a). <E T="03">See</E> 12 CFR part 362. </FTNT> The National Bank Act enumerates certain powers that national banks may exercise and authorizes national banks to exercise “all such incidental powers as shall be necessary to carry on the business of banking.”  <SU>8</SU> <FTREF/> Section 7.1000 of the OCC's regulations identifies the criteria that the OCC uses to determine whether an activity is authorized as part of, or incidental to, the business of banking under 12 U.S.C. 24(Seventh). <SU>9</SU> <FTREF/> If a national bank has not been authorized by federal law, including the National Bank Act, to engage in an activity, then national ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 23k characters. 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