- US Federal Reserve Chairman, Jerome Powell, has told the US Congress that banks are free to use crypto tech and work with crypto firms in ways that are “protective of safety and soundness”.
- The Fed chair also said that he’s seen a significant change in tone around digital assets, driven by what he says is “evolving thinking and the evolving status of the crypto industry”.
Chair of the US Federal Reserve, Jerome Powell, told the US Congress on June 24 that he sees no problem with banks working with crypto firms and using crypto technologies so long as they adhere to existing rules designed to protect their customers and the broader economy.
“Banks get to decide who their customers are, that’s not our decision,” the Fed chair told lawmakers during testimony as part of his semiannual monetary report to Congress.
Banks are also free to conduct crypto activities, as long as they do so in a way that is protective of safety and soundness.
Jerome Powell, US Federal Reserve chairPowell also told Congress he’s seeing “a very significant change in the tone” in the finance industry’s approach to digital assets driven by what he characterises as “evolving thinking and the evolving status of the crypto industry”.
Powell’s permissive comments around financial institutions’ use of digital assets came the day after the Fed announced it had removed the concept of “reputational risk” from its bank supervision programme, potentially opening up access to financial services for crypto firms.
Some, including pro-crypto senator Cynthia Lummis, believe overly-stringent ‘reputational risk’ policies had been used to deny many crypto firms access to financial services.
Related: Fed Drops ‘Reputational Risk’ Label in Bank Exams, Easing Path for Crypto Firms
Powell Supportive of Crypto Legislation
Powell also commented on the crypto bills currently working their way through the US legislative system. “I think it’s a great thing that the bills are moving,” the Fed chair said.
We need it. We need a stablecoin framework.
Jerome Powell, US Federal Reserve chairThe GENIUS Act, the bill which seeks to regulate stablecoins in the US, passed the Senate last week receiving support from both Republican and Democrat lawmakers. If the bill clears the Congress it could be signed into law by US President Donald Trump by September.
Related: U.S. Senate Passes GENIUS Act, Advancing Stablecoin Regulation
Another bill known as the CLARITY Act is currently being considered by the US House. If passed it would clarify the roles of various regulators — including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) — in overseeing digital asset markets.
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