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In his June 24, 2025 testimony before Congress, Powell stated that ābanks are perfectly able to serve crypto customersā provided activities are conducted āsafe and soundā and with appropriate risk management.
Importantly, the Fed has removed āreputational riskā from its examination criteria, eliminating one key barrier that previously discouraged banks from serving crypto-related clients.
This marks a clear shift from prior regulatory caution and opens the door for traditional financial institutions to formally integrate with crypto firms.
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š Why It Matters
Institutional Capital Inflows: Almost instantly after Powellās remarks, Bitcoin surgedāgoing above $105,000āand over $588 million flowed into Bitcoin spot ETFs, with additional funds going into Ethereum ETFs.
Momentum Behind Stablecoin Regulation: Powell also voiced support for legislative frameworks like the GENIUS Act, building confidence around the future of dollar-backed stablecoins.
Industry Integration: Ripple Labs and other firms are already pursuing national trust bank charters and Fed master accounts to enable direct settlement and banking services.
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ā ļø Caveats & Ongoing Concerns
Risk still matters: The Fed emphasized that crypto services must still meet strong safety and soundness standards.
Regulatory evolution not complete: The success of this shift hinges on banks, regulators, and Congress implementing consistent rules and oversight. Proposed legislation like the GENIUS Act and Digital Asset Market Clarity Act remain under debate.
Industry criticism: Some commentators warn that individual banks may still act as gatekeepers, restricting access even under a friendlier regulatory environment.
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š Summary
Topic Details
What happened? Powell confirmed in June 2025 that banks can offer crypto services under proper risk management.
Why it matters Clears regulatory uncertainty, encourages institutional entry, and boosts crypto market confidence.
What follows next? Final OCC rules on custody by mid-July, potential bank licenses by crypto firms, and pending legislation shaping the ecosystem.
Risks still remain Market volatility, uneven bank engagement, and evolving regulatory frameworks.
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