Jerome Powell indicated that the U.S. would benefit from clearer rules for the crypto sector.
The chair of the Fed (the U.S. central bank), Jerome Powell, expressed support for cryptocurrency legislation before Congress on Tuesday (24), signaling that the U.S. would benefit from bills currently under consideration.
“It’s great that bills are being approved,” Powell said. “We need a framework for stablecoins.”
Last week, senators approved the GENIUS Act, a bill that would establish a framework for the issuance and trading of stablecoins. The bill received bipartisan support and could be signed by U.S. President Donald Trump if approved by the House.
Meanwhile, senators are reviewing the CLARITY Act, a bill to structure cryptocurrency markets.
Powell's approval for the stablecoin framework follows the Fed's guidance on Monday. The agency stated in a statement that it would no longer consider “reputational risk” when evaluating banks — a criterion that regulators have used in the past to limit institutions interested in crypto assets.
“Our view is that banks decide who their customers are,” Powell said, reiterating comments he made in January. “Banks are also free to engage in activities with cryptocurrencies, as long as they do so in a way that protects safety and soundness.”
For months, Republican lawmakers have investigated allegations of “debanking” under the Biden administration, seeking to clarify whether certain individuals and entities were excluded from the financial system due to their involvement in specific sectors, including cryptocurrencies. Powell said that the Fed has become increasingly aware of the issue of debanking over the past year.
“Throughout 2024, [we came] to the conclusion that this was a serious issue we needed to address,” he said, adding that the matter has become more urgent in the “last two years.”
Since Trump's re-election, traditional financial institutions have been embracing the world of cryptocurrencies, as legislators move closer to clearer rules. Among the signs of new openness from banks, JP Morgan CEO Jamie Dimon, a skeptic regarding cryptocurrencies, stated last month that customers can now buy Bitcoin.
Powell advocated for stricter rules for stablecoins in 2021, stating that they should be regulated “in comparable ways” to bank deposits and money market mutual funds, as they could become “a significant part of the payments universe” one day.
Although the Fed has been monitoring developments in the cryptocurrency space for years, especially regarding central bank digital currency (CBDC), Powell noted that Wall Street firms have shifted their stance on the technology more recently.
“What I see is a very significant change in tone, and it really reflects the evolution of thought and the status of the cryptocurrency industry,” he said. “I hope that, over time, we will see more activity.”