Felton is not permitted to play, practice or take part in any UNC activities.
The West Columbia, South Carolina, native has been utilized sparingly in 22 games this season.
In 9.7 minutes per contest, Felton is averaging 2.9 points and 1.6 assists, while shooting 38.7 percent from the field and 31.4 percent from long range.
His best performance came in a December win over Western Carolina, when he registered a career-high 15 points and five assists.
Since scoring 12 points against Ohio State on Dec. 23, Felton has netted two or fewer points in nine consecutive games.
Per 247Sports, Felton entered North Carolina as a 4-star recruit who ranked as the No. 30 overall player and No. 1 combo guard in the 2017 class.
Felton's indefinite absence will shorten the 16-6 Tar Heels' rotation slightly, but it won't change the fact that Joel Berry II and Kenny Williams remain the go-to players in the backcourt.