XRP: Can Banks Use the Altcoin After Fed Withdrew Its Guidance?

This unexpected move sparked immediate conversation across the financial and crypto sectors — especially among supporters of XRP and other prominent altcoins.

The Board’s announcement rescinded supervisory letters from 2022 and 2023, which had previously outlined strict expectations for state member banks engaged in crypto-asset activities. Under the old rules, banks had to provide advance notice and gain non-objection from the Fed before engaging with crypto-assets or dollar tokens. Now, that framework is being dismantled.

Instead, the Federal Reserve will monitor crypto-asset activities through the normal supervisory process — a more flexible, less intrusive approach. This change aligns with a broader effort to adapt regulation to evolving financial innovations while maintaining safety and soundness in the banking system.

What This Means for XRP

With the withdrawal of prior guidance, banks are no longer required to seek pre-approval for activities involving digital assets, including XRP. In theory, this opens the door wider for banks to explore using XRP and similar cryptocurrencies, especially in roles like:

Cross-border payments and remittances Liquidity management solutions (e.g., On-Demand Liquidity, ODL) Tokenized asset settlements

However, while the removal of formal guidance removes a significant bureaucratic hurdle, it does not mean “anything goes.” Banks must still comply with broader supervisory expectations around risk management, anti-money laundering (AML) compliance, and overall operational safety.

In fact, the Federal Reserve emphasized that it will continue monitoring crypto-asset activities through standard supervision. This implies that banks using XRP must demonstrate sound practices and risk mitigation strategies during regular examinations.

Is This a Green Light for XRP Adoption?

This regulatory shift could be seen as an encouraging sign for altcoins like XRP. Banks now have greater autonomy to engage with digital assets without facing automatic regulatory roadblocks. Ripple, the company behind XRP, has long positioned itself as a bridge between traditional finance and crypto, and this change could enhance the attractiveness of using XRP for institutional applications.

Yet caution remains crucial. Banks will likely move incrementally, beginning with pilot programs and limited-scope initiatives before embracing full-scale crypto integration. Legal clarity surrounding XRP — particularly its classification as a security or non-security — remains a lingering factor that banks will continue to watch carefully.

Conclusion

The Federal Reserve’s withdrawal of its specific crypto-asset guidance represents a notable softening of its regulatory stance. For XRP and other digital assets, this could create new opportunities within the banking sector, particularly in areas like payment infrastructure and liquidity provisioning.

Still, while the path is more open, it is not without guardrails. Banks looking to leverage XRP must do so thoughtfully, with a strong focus on compliance, risk management, and regulatory engagement.

In short: Banks can now use XRP more freely, but they’ll have to do it responsibly.

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