[Federal Register Volume 90, Number 243 (Monday, December 22, 2025)]
[Rules and Regulations]
[Pages 59731-59733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-23548]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 90, No. 243 / Monday, December 22, 2025 /
Rules and Regulations
[[Page 59731]]
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Docket No. OP-1876]
RIN 7100-AH14
Policy Statement on Section 9(13) of the Federal Reserve Act
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule; rescission of a policy statement; issuance of a
policy statement.
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SUMMARY: 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 Supplementary Information 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.
DATES: This final rule and policy statement is effective on December
22, 2025.
FOR FURTHER INFORMATION CONTACT: 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.
SUPPLEMENTARY INFORMATION:
I. Background
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)].'' \1\ 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.'' \2\
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.\3\
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\1\ 12 U.S.C. 330 (as amended by Federal Deposit Insurance
Corporation Improvement Act of 1991 Sec. 303(b), Public Law 102-
242, 105 Stat. 2236, 2353).
\2\ 12 U.S.C. 1831a(a). See 12 CFR part 362.
\3\ 88 FR 7848 (Feb. 7, 2023); 12 CFR 208.112.
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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
Supplementary Information (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.
II. Rescission of the 2023 Policy Statement
In January 2023, the Board published the 2023 Policy Statement,\4\
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.
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\4\ See 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), available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20230127a.htm.
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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
[[Page 59732]]
issuances have been rescinded or withdrawn.\5\ 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.
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\5\ See, e.g., 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), available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250424a.htm;
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), available at https://www.federalreserve.gov/newsevents/pressreleases/bcreg20250815a.htm.
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II. 2025 Policy Statement
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.
A. Legal Authority
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].'' \6\ 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.'' \7\
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\6\ 12 U.S.C. 330 (as amended by Federal Deposit Insurance
Corporation Improvement Act of 1991 Sec. 303(b), Public Law 102-
242, 105 Stat. 2236, 2353).
\7\ 12 U.S.C. 1831a(a). See 12 CFR part 362.
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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.'' \8\ 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).\9\ If a national bank has not been authorized by
federal law, including the National Bank Act, to engage in an activity,
then national banks are not permitted to engage in such activity.
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\8\ 12 U.S.C. 24(Seventh).
\9\ 12 CFR 7.1000.
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B. Application
The 2025 Policy Statement applies to insured and uninsured state
member banks. Insured state member banks, however, are already required
by section 24 of the FDIA and part 362 of the FDIC's regulations to
seek approval from the FDIC when seeking to conduct an activity as
principal that is not permissible for national banks. As established
under those provisions, insured state member banks may not engage as
principal in any type of activity that is not permissible for a
national bank unless--(i) the FDIC has determined that the activity
would pose no significant risk to the Deposit Insurance Fund; and (ii)
the insured state member bank is, and continues to be, in compliance
with applicable capital standards prescribed by the Board.\10\
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\10\ 12 U.S.C. 1831a(a)(1).
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If an activity is authorized for national banks to conduct as
principal, it is generally permissible for insured state member banks
to conduct as principal, provided the activity is permitted under
relevant state law and the bank adheres to the terms, conditions, and
limitations placed on national banks by the OCC with respect to the
activity. Furthermore, if the FDIC, by rule, permits insured state-
chartered banks to engage in the activity as principal even if that
activity is not permissible for national banks, it is generally
permissible for insured state member banks to engage in the activity as
principal, provided the activity is permitted under state law. If there
is no authority for an insured state-chartered bank to engage in a
particular activity as principal under federal statute or part 362 of
the FDIC's regulations, an insured state member bank should apply to
the FDIC for permission to engage in the activity as principal under
part 362 of the FDIC's regulations.\11\ Furthermore, if the FDIC has
permitted only specific insured state-chartered bank(s) to engage in
the activity as principal, other insured state-chartered banks must
similarly apply to the FDIC for specific permission.
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\11\ See 12 CFR part 303, subpart G.
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An uninsured state member bank may not engage in any activity as
principal that is not authorized for national banks or insured state-
chartered banks, unless the Board has provided otherwise by regulation,
order, or other means, or the uninsured state member bank has received
the permission of the Board under section 208.3(d)(2) of the Board's
Regulation H.\12\ Under that provision, a state member bank may not,
without the permission of the Board, change the general character of
its business or the scope of the corporate powers it exercised at the
time of its admission to membership.\13\ To the extent firms have
inquiries regarding legal permissibility, the Board will engage with
the FDIC and OCC as appropriate, consistent with this policy statement.
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\12\ 12 CFR 208.3(d)(2).
\13\ Uninsured state member banks must receive approval from the
Board for permission to conduct an activity as principal, if the
FDIC has permitted the activity only for specific insured state
bank(s). In such case, the fact that the FDIC has approved at least
one insured state-chartered bank to engage in the activity would be
highly pertinent to the Board's analysis.
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In determining whether to grant an uninsured state member bank or
an uninsured state-chartered bank applicant for membership permission
to engage in an activity as principal that is not permissible for
insured state member banks, the Board, under the 2025 Policy Statement,
will consider whether the uninsured state member bank would be capable
of engaging in such activity in a manner that is consistent with bank
safety and soundness and preserving the stability of the U.S. financial
system. The Board may consider (i) the regulatory framework to which
the uninsured state member bank is subject; (ii) the risks presented by
the proposed activities and the bank's planned internal controls
framework to address such risks; and (iii) how the institution would
mitigate the risks otherwise addressed by deposit insurance and FDIC
resolution. Among other things, the Board may consider whether the
uninsured state member bank has a financial profile that is at least as
effective as deposit insurance in minimizing the risk of deposit runs
and contagion. This may, for example, be demonstrated if the uninsured
state member bank has (i) a sufficient amount of total loss-absorbing
capacity (consisting of capital and long-term debt) that is subordinate
to the bank's deposits and other short-term liabilities; or (ii) high-
quality liquid assets equal to 100 percent of the bank's demand
deposits and other short-term liabilities. The Board may also consider
whether the uninsured state member bank has a resolution plan that
demonstrates how the bank could be recapitalized or wound down in an
orderly manner if it fails to remain a viable going concern.
[[Page 59733]]
III. Regulatory Analyses
This rule clarifies how the Board interprets and intends to
exercise its discretion under section 9(13) of the Act. It is not
itself binding on state member banks. Accordingly, the provisions of
the Administrative Procedure Act (APA) regarding notice of proposed
rulemaking and opportunity for public participation are not
applicable.\14\
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\14\ 5 U.S.C. 553(b)(4)(A).
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Because no notice of proposed rulemaking is required to be issued,
or has been issued, in connection with this rule, it is not a ``rule''
for purposes of the Regulatory Flexibility Act, and that act,
therefore, does not apply.\15\
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\15\ See 5 U.S.C. 601(2).
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In accordance with the Paperwork Reduction Act of 1995 (PRA),\16\
the Board may not conduct or sponsor, and a respondent is not required
to respond to, an information collection unless it displays a currently
valid Office of Management and Budget control number. The Board has
reviewed the rule and has determined that it contains no collections of
information as defined in the PRA.
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\16\ 44 U.S.C. 3501 et seq.
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Section 722 of the Gramm-Leach-Bliley Act \17\ requires the federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The Board has sought to present this
rule in a simple and straightforward manner.
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\17\ 12 U.S.C. 4809.
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The APA does not require the Board to delay the effective date of
the rule.\18\ Accordingly, the rule is effective December 22, 2025.
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\18\ See 5 U.S.C. 553(d)(2).
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List of Subjects in 12 CFR Part 208
Accounting, Agriculture, Banks, banking, Confidential business
information, Consumer protection, Crime, Currency, Federal Reserve
System, Flood insurance, Insurance, Investments, Mortgages, Reporting
and recordkeeping requirements, Securities.
Authority and Issuance
For the reasons stated in the preamble, the Board of Governors of
the Federal Reserve System amends part 208 of chapter II of title 12 of
the Code of Federal Regulations as follows:
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL
RESERVE SYSTEM (REGULATION H)
0
1. The authority citation for part 208 continues to read as follows:
Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a,
371d, 461, 481-486, 601, 611, 1814, 1816, 1817(a)(3), 1817(a)(12),
1818, 1820(d)(9), 1833(j), 1828(o), 1831, 1831o, 1831p-1, 1831r-1,
1831w, 1831x, 1835a, 1882, 2901-2907, 3105, 3310, 3331-3351, 3905-
3909, 5371, and 5371 note; 15 U.S.C. 78b, 78I(b), 78l(i), 780-
4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801, and 6805; 31 U.S.C.
5318; 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.
Subpart J--Interpretations
0
2. Revise Sec. 208.112 to read as follows:
Sec. 208.112. Policy statement on section 9(13) of the Federal
Reserve Act.
(a) Under section 9(13) of the Federal Reserve Act (12 U.S.C. 330),
a State member bank may exercise all corporate powers granted it by the
State in which it was created except that 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 Federal Deposit Insurance
Act.'' The Board interprets this provision as vesting in the Board the
authority to prohibit or otherwise restrict State member banks and
their subsidiaries from engaging as principal in any activity
(including acquiring or retaining any investment) that is not
permissible for a national bank, unless the activity is permissible for
State-chartered banks by Federal statute or under section 24(a) of the
Federal Deposit Insurance Act.
(b) The Board generally believes that the same activity, presenting
the same risks, should be subject to the same regulatory framework, and
that a different activity, presenting different risks, should be
subject to a different regulatory framework. Consistent with this
principle, the Board intends to interpret section 9(13) of the Federal
Reserve Act (12 U.S.C. 330) to facilitate innovation by insured and
uninsured State member banks in a manner consistent with safety and
soundness of State member banks and preserving the stability of the
U.S. financial system.
(c) In alignment with this principle, the Board generally presumes
that it will exercise its discretion under section 9(13) of the Federal
Reserve Act (12 U.S.C. 330) to limit the authority of insured State
member banks and their subsidiaries to engage in any activity as
principal to 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 insured State-chartered banks under section 24 of
the Federal Deposit Insurance Act.
(d) If an activity is authorized for national banks to conduct as
principal, it is generally permissible for State member banks to
conduct as principal, provided that it is permitted under relevant
State law and the bank adheres to the terms, conditions, and
limitations placed on national banks by the OCC with respect to the
activity.
(e) If the FDIC, by rule, permits insured State-chartered banks to
engage in any activity as principal under section 24 of the Federal
Deposit Insurance Act that is not permissible for national banks, it is
generally permissible for State member banks to engage in that
activity, provided it is permitted under applicable State law. If there
is no authority for an insured State-chartered bank to engage in a
particular activity as principal under Federal statute or part 362 of
the FDIC's regulations, that activity must be authorized for insured
depository institutions by the FDIC under section 24 of the Federal
Deposit Insurance Act (12 U.S.C. 1831a) and the insured State member
bank must be in compliance with applicable capital requirements issued
by the Board.
(f) An uninsured State member bank may not engage in any activity
as principal that is not authorized for national banks or insured
State-chartered banks, unless the Board has provided otherwise by
regulation, order, or other means, or the uninsured State member bank
has received the permission of the Board under Sec. 208.3(d)(2) of the
Board's Regulation H. In determining whether to grant an uninsured
state member bank or an uninsured State-chartered bank applicant for
membership permission to engage in an activity as principal that is not
permissible for insured State member banks, the Board will consider
whether the uninsured State member bank would be capable of engaging in
such activity in a safe and sound manner and in a manner that is
consistent with preserving the stability of the U.S. financial system.
By order of the Board of Governors of the Federal Reserve
System.
Benjamin W. McDonough,
Deputy Secretary of the Board.
[FR Doc. 2025-23548 Filed 12-19-25; 8:45 am]
BILLING CODE 6210-01-P