Key Takeaways
- Federal Reserve Chair Jerome Powell stated that crypto assets are becoming more mainstream and the industry is maturing.
- Powell expressed support for banks engaging with crypto, as long as regulation ensures safety and soundness.
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Federal Reserve Chair Jerome Powell said Wednesday that Bitcoin and other crypto assets have matured and become more mainstream, and that the central bank is reassessing policy statements made during the Biden era.
Powell’s comments came in response to a question from Senator Cynthia Lummis during his June 25 testimony before the Senate Banking Committee.
Lummis questioned what had changed regarding stablecoin risks since the Fed’s 2023 policy under Section 9(13), and pressed Powell on whether the Fed intends to withdraw the policy statement.
Section 9(13) gives the Federal Reserve Board the authority to regulate the activities of state-chartered member banks. In January 2023, the Fed issued a formal policy statement under this authority, clarifying how it would treat “novel activities,” specifically those involving crypto-assets, distributed ledger technology (DLT), and stablecoins.
“The Board generally believes that issuing tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices,” per the policy statement.
“The industry is maturing, our understanding of it is improving,” Powell said during Wednesday’s testimony. “And in a sense, it’s becoming much more mainstream.”
Powell noted that regulators are reassessing previous decisions made during crypto’s early development phase.
“All of us are revisiting the things that were done during that era,” he said.
The Fed chair also indicated support for banks engaging in crypto under appropriate conditions.
“It’s appropriate, it’s always been appropriate for banks to choose their customers and to be able to undertake activities as long as they’re safe and sound,” Powell said.
Addressing the Section 9(13) policy statement, Powell said it was part of a broader regulatory framework that wasn’t solely focused on crypto, though crypto was one component.
He reiterated that the Fed is currently reviewing and withdrawing several crypto-related guidance issued during the Biden era.
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