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The Federal Reserve said it is taking back prior-reporting requirements on banks’ crypto and stablecoin activities.

The U.S. Federal Reserve is withdrawing its guidance on crypto and stablecoin activities that previously discouraged banks from participating, its Board of Governors announced Thursday.

This includes rescinding its 2022 supervisory letter that required banks to provide notification of crypto-related activities ahead of time, along with supervisory requirements for stablecoin activities issued in 2023.

"As a result, the Board will no longer expect banks to provide notification and will instead monitor banks' crypto-asset activities through the normal supervisory process," the statement said.

The Federal Reserve has also joined the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency to reverse two previous statements regarding banks' exposure to crypto. The statement specifically expressed concern about potential risks of fraud and scams among crypto asset participants.

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"The Board will work with the agencies to consider whether additional guidance to support innovation, including crypto-asset activities, is appropriate," the Federal Reserve said.

Thursday's announcement was met with positive reaction from the crypto community, many of whom welcomed the federal-level shift toward a less adversarial approach to the crypto asset sector.

"Banks are now free to begin supporting bitcoin," Strategy's Michael Saylor wrote on X, sharing the Federal Reserve announcement.