Washington, D.C. — Federal Reserve Chair Jerome Powell announced on Wednesday that U.S. banks may be allowed to offer cryptocurrency-related services, but only under stringent regulatory conditions. Speaking at a press conference following the Federal Open Market Committee (FOMC) meeting, Powell emphasized the need for robust oversight to ensure financial stability and consumer protection as digital assets continue to gain traction in the mainstream economy.
Powell acknowledged the growing interest in cryptocurrencies and their potential to reshape the financial landscape. However, he cautioned that the volatile and largely unregulated nature of the crypto market poses significant risks to both consumers and the broader financial system. “Banks must approach crypto services with caution,” Powell stated. “We are committed to fostering innovation, but not at the expense of safety and soundness.”
The Fed’s conditions for banks offering crypto services include enhanced risk management frameworks, strict compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations, and clear disclosure of risks to customers. Additionally, banks will be required to hold sufficient capital reserves to mitigate potential losses from crypto-related activities.
Powell’s remarks come amid increasing pressure from the banking industry for clearer guidance on digital assets. Many financial institutions have expressed interest in offering crypto custody, trading, and payment services, but have been hesitant due to regulatory uncertainty. The Fed’s announcement is seen as a step toward providing much-needed clarity, though some industry experts warn that the proposed conditions could limit widespread adoption.
Crypto advocates welcomed the Fed’s openness to innovation but urged regulators to avoid overly restrictive measures that could stifle growth. “This is a positive signal for the industry, but the devil will be in the details,” said Sarah Johnson, CEO of a blockchain-focused think tank. “We need balanced regulation that protects consumers without hindering progress.”
The announcement also follows recent actions by other regulators, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), to tighten oversight of the crypto market. Powell emphasized the importance of interagency collaboration to create a cohesive regulatory framework.
As the crypto industry continues to evolve, the Fed’s cautious approach reflects the delicate balance between fostering innovation and safeguarding the financial system. Powell concluded, “We are navigating uncharted territory, and our priority is to ensure that the benefits of new technologies are realized without compromising stability.”
The Fed is expected to release detailed guidelines for banks in the coming months, with input from industry stakeholders and other regulators.
