- Jerome Powell said, “There’ll be some loosening of that,” referring to crypto-related banking restrictions imposed in earlier years.
- Powell confirmed bipartisan interest in stablecoin regulation, stating, “Congress is again looking… a legal framework for stablecoins.”
- He emphasized crypto’s evolution, noting regulation should support innovation “in a way that preserves safety and soundness” in the system.
Federal Reserve Chair Jerome Powell stated that cryptocurrencies are reaching mainstream finance, promising eased banking guidance and endorsing a legal framework for stablecoins as a prudent path forward while preserving financial safety.
Shift Toward Mainstream Adoption
Speaking At the Economic Club of Chicago, Powell noted that past crypto scandals once drove strict banking restrictions. He said, “There’ll be some loosening of that [crypto-related banking guidance],” to adapt policies. Moreover, Powell remarked that evolving market conditions warrant fresh policy review.
He added that adjustments aim to foster innovation “in a way that preserves safety and soundness.” He also observed that growing institutional interest now requires updated guidance. Consequently, stakeholders anticipate updated guidance from regulators in the coming months.
Legislative Progress on Stablecoins
Powell said, “Congress is again looking at both the Senate and the House [for] a framework, a legal framework for stablecoins,” he said. “That’s a good idea. We need that.” He noted the industry awaits defined timelines for stablecoin regulation.
Stakeholders welcome clear rules to reduce uncertainty and encourage market trust. Stablecoins, tokens pegged to fiat currencies, now support numerous digital transactions. Powell added that rules must include “consumer protections of the typical sorts and transparency.” Additionally, legislators plan to require regular audits of stablecoin reserves to ensure asset backing.
Banking Participation and Oversight
Relaxed guidance could permit banks to custody crypto assets and handle stablecoin payments. Powell noted that such steps follow a risk-based approach to protect depositors. Additionally, banks may face new stress test requirements for crypto exposures.
Furthermore, banks may expand digital asset services, attracting additional institutional capital. Regulators will adjust measures based on thorough risk assessments before implementing changes. Moreover, oversight coordination is expected among federal agencies to ensure cohesive policy across the financial sector.
