Federal Reserve Vice Chair for Supervision Michelle Bowman has opened a major debate about the future of digital assets in public service. Speaking at a blockchain symposium in Wyoming, she proposed allowing central bank employees to hold small amounts of cryptocurrency.

According to Bowman, first-hand ownership of digital assets would give regulators a deeper understanding of the markets they are tasked with overseeing. Current Fed rules, however, strictly prohibit employees from owning any cryptocurrency.

First-Hand Experience as a Key to Regulation

“You cannot fully understand how crypto ownership or transfers work unless you’ve experienced it yourself,” Bowman stressed. She compared it to being taught how to ski by someone who has never put on skis, no matter how many books they’ve read on the subject.

Bowman argued that allowing “de minimis” holdings of crypto would not only improve oversight but also help attract and retain top talent. Many Fed inspectors come from the private sector, where expertise in digital assets is increasingly valued. Banning such ownership, she warned, could make public service roles less appealing.

A Call for Cultural Change in Regulation

Bowman also criticized regulators’ “overly cautious approach” to emerging technologies—not only blockchain but also artificial intelligence.

“We have two choices: either embrace change and shape a strong, safe framework that ensures efficiency and resilience—or resist it and risk allowing new technologies to bypass the traditional banking system,” she said.

While acknowledging that innovation brings risks, Bowman emphasized that they are manageable once properly identified and weighed against potential benefits.

Moving Away from “Reputational Risk”

Another highlight of her speech was her criticism of using so-called reputational risk as a supervisory tool. According to Bowman, the concept was too subjective and often misused to unfairly restrict legitimate businesses. She backed the Fed’s commitment, along with other agencies, to move away from this practice.

She further urged banks to work more directly with regulators by sharing expertise and insights on blockchain and digital assets. “I am committed to changing the Fed’s culture toward a more open approach to technology,” she said.

Conclusion: The Fed at a Crossroads

Bowman warned that if central banks fail to embrace innovation, they risk losing relevance for both consumers and businesses. “Change is inevitable,” she concluded.

Her proposal not only paves the way for a fresh approach to digital asset ownership but also signals a potential cultural shift in U.S. financial regulation.

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