Michaela
Federal Reserve Chairman Jerome Powell has signaled that U.S. banks may soon see a relaxation of existing crypto restrictions, as regulators look to balance financial innovation with consumer protection.
Speaking at The Economic Club of Chicago on Wednesday, Powell acknowledged the troubled history of digital assets, citing years marked by fraud and market failures. However, he noted that the overall environment surrounding cryptocurrencies is becoming more mainstream, suggesting a shift in how regulators may approach the sector moving forward.
“We took a pretty conservative, other bank regulators took an even more conservative perspective on the guidance and rules we imposed on banks. I think there will be some loosening of that,” Powell said.
Powell emphasized that any easing of crypto restrictions would be approached with caution, aiming to maintain the stability of the banking system while encouraging responsible innovation. He stressed that consumer protection would remain a top priority, noting that regulators would avoid exposing users to risks they may not fully understand or compromise the safety of financial institutions.
Since President Donald Trump assumed office in January, U.S. banking regulators have begun to adopt a more open approach to digital assets. In a move signaling this shift, the Federal Deposit Insurance Corporation announced plans to withdraw previous guidance and issue new rules that would allow banks to pursue approved crypto-related activities without seeking prior approval.
Powell also noted that lawmakers on Capitol Hill are actively working to establish a regulatory framework for stablecoins, signaling growing momentum toward formal oversight of the digital asset sector. “Depending on what’s in it, that’s a good idea. We need that. There isn’t one now,” the Fed chair stated.
Additionally, Powell reflected on the turbulence that rocked the crypto sector in 2022 and 2023, citing several major collapses as pivotal moments. He noted that during that period, the Fed collaborated with Congress in an effort to establish a legal framework for stablecoins, which he said would have provided a strong foundation for regulation. However, those efforts ultimately fell short.
“I think that the climate is changing and you’re moving into more mainstreaming of that whole sector, so Congress is again looking […] at a legal framework for stablecoins,” Powell said.
Read More
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- UK Regulators Warn Stablecoins Could Undermine Pound and Markets
- SHIB Lead Dev Gives Rare Update on SHI Stablecoin Status
Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
