Bank Regulation
Web3 / regulatory frameworks
The body of law, rules, and supervisory frameworks that govern the activities of depository institutions including commercial banks, savings institutions, and credit unions, covering capital requirements, deposit insurance, lending standards, consumer protection, anti-money laundering compliance, and the range of products and services banks may offer. In the United States, bank regulation is distributed across the Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and state banking regulators. The intersection of bank regulation with cryptocurrency became a major flashpoint in 2022-2025, as regulators under the Biden administration issued guidance discouraging banks from holding or facilitating crypto activities (Staff Accounting Bulletin 121, Operation Choke Point 2.0), while the Trump administration reversed course in 2025, withdrawing SAB 121 and encouraging banks to engage with digital assets. The GENIUS Act, signed in July 2025, explicitly created pathways for regulated depository institutions to issue payment stablecoins under their existing banking supervision. Example: SAB 121, issued by the SEC in March 2022, required banks and broker-dealers to record customer-held crypto as liabilities on their balance sheets, making crypto custody economically unviable for most regulated institutions. Its repeal via SAB 122 in early 2025, following bipartisan Congressional pressure and the change in administration, was widely celebrated as opening the door for institutional banks to offer crypto custody services. Why it matters for Web3: Bank regulation shapes whether the capital, custody, and distribution infrastructure of traditional finance can interface with crypto. When banks are prohibited from or penalized for crypto engagement, institutional capital faces barriers to entering on-chain markets. When banks are permitted or encouraged to engage, it accelerates the flow of trillions of dollars in institutional capital toward regulated digital asset products.
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