Key Takeaways:
- Fed Chair Jerome Powell called for stronger crypto regulations, urging Congress to establish a clearer framework.
- Powell reassured that banks can serve crypto customers but face higher regulatory scrutiny for deeper crypto involvement.
- He acknowledged stablecoins as a potential financial stability risk, referencing a December oversight report.
Federal Reserve Chair Jerome Powell emphasized the need for stronger cryptocurrency regulations during a press conference following the Federal Open Market Committee (FOMC) meeting on January 29.
While announcing that U.S. interest rates would remain unchanged, Powell stated that banks can serve crypto customers as long as they properly manage risks.
JUST IN: 🇺🇸 Federal Reserve Chair Jerome Powell says "banks are perfectly able to serve crypto customers." pic.twitter.com/IiFJhA8Qg3
— Watcher.Guru (@WatcherGuru) January 29, 2025
However, he indicated that financial institutions seeking deeper involvement in crypto would face stricter regulatory requirements.
Powell clarified that the Fed is not against innovation and does not want banks to sever ties with legal crypto clients due to excessive regulatory concerns.
He highlighted the importance of a more comprehensive regulatory framework for the crypto industry and noted that Congress has been actively working on potential legislation.
Powell mentioned ongoing collaboration between the Fed and lawmakers to improve oversight.
His comments were partly in response to a December Financial Services Oversight Council report warning that stablecoins could pose financial stability risks.
The crypto market often reacts to Fed policy decisions, and Powell’s stance could influence future regulatory developments.
Meanwhile, former President Donald Trump recently urged the Fed to cut interest rates, though the decision remains outside presidential control.
Powell is set to lead the Fed until May 2026.