- Fed Chair Jerome Powell stated that US banks can hold crypto and serve clients if they establish proper risk controls, signaling a more open regulatory stance.
- Powell claimed a stronger regulatory framework would benefit the crypto industry, and advised financial institutions to not overly restrict access to legal crypto businesses.
Crypto markets have gone parabolic after Fed chair Jerome Powell claimed US banks can hold crypto assets as long as they have established risk controls for clients.
Speaking after the Federal Open Market Committee (FOMC) meeting, Powell acknowledged the Fed is open to “financial innovation”, stating that financial institutions are free to engage with the crypto sector as long as they understand and mitigate potential dangers.
Banks are perfectly able to serve crypto customers as long as they can understand and service the risks. […] The threshold has been a little higher for banks engaging in crypto activities, and that’s because they’re so new.
Jerome Powel, Federal Reserve ChairRelated: Bitwise Files S-1 for DOGE ETF as Bitcoin, Ethereum Funds See Massive Outflows
Bitcoin initially dropped 1.5% to US$101K (AU$162K) after the FOMC’s decision to keep interest rates unchanged, delaying potential cuts until June of this year.
However, Powell’s mention of crypto sparked a rally, pushing Bitcoin up 3.3%, reaching US$104K (AU$166.6K).
Powell Warns Against “Excess Risk Aversion” in Crypto Banking
Powell also acknowledged concerns about “debanking”, the practice of financial institutions cutting ties with crypto companies due to perceived risks. He basically told banks that excessive risk aversion is unnecessary:
We certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion.
Jerome Powel, Federal Reserve ChairHis comments come just weeks after venture capitalist Marc Andreessen, who’s shaping the Trump administration, criticised banks for denying financial services to crypto firms. Powell’s remarks suggest a more balanced regulatory approach, potentially easing tensions between banks and the crypto industry.
Powell also acknowledged that proper regulatory laws would help the crypto industry, stating that a “greater regulatory apparatus” would be beneficial for crypto companies and investors. His remarks come amid broader scrutiny of banks’ relationships with crypto firms.
Related: Metaplanet Sets Record with Asia’s Largest Equity Raise for BTC as MicroStrategy Announces Strike Preferred Stock Offering
Credit: Source link
