Michelle Bowman, Vice Chair for Supervision of the Federal Reserve (Fed), spoke on Tuesday with bold words that sounded almost like those of a cryptocurrency industry policy expert. She not only called for banks to embrace the wave of digital assets but also argued that the Fed should establish rules that do not hinder the development of the cryptocurrency industry and lift the ban on Fed employees holding cryptocurrencies.
Michelle Bowman stated at a blockchain seminar in Wyoming: 'We stand at a crossroads: either seize the opportunity to shape the future or risk falling behind.'
We must make a choice: to embrace change and jointly create a reliable and sustainable framework—ensuring financial soundness and security while balancing efficiency and speed; or to stand still and allow emerging technologies to bypass the traditional banking system, completely rewriting the financial landscape.
Michelle Bowman pointed out that banks and regulatory bodies must shed their 'overly conservative mindset' and maintain an open attitude toward new technologies, stating frankly:
Some bankers are concerned that new technologies pose a threat to existing business models. However, the financial industry itself is constantly evolving; whether banks and regulatory bodies choose to embrace or resist, the wave of technology will ultimately change the banking system.
Since Michelle Bowman confirmed her appointment as Vice Chair for Supervision in June, the Fed has ended the special regulatory program for banks involved in cryptocurrency activities and removed 'reputational risk' from the inspection criteria—considered a significant step toward reversing 'de-banking.' In April of this year, the Fed also withdrew previous restrictions on banks participating in cryptocurrency and stablecoin businesses, sending a relatively friendly signal.
Michelle Bowman also mentioned on Tuesday that the attitude of U.S. regulators toward crypto assets has undergone a significant shift:
The industry has already felt the friction with banking regulators, including unclear standards, contradictory guidelines, and inconsistent regulatory interpretations.
What we need is a clear and strategic regulatory framework to promote the adoption of new technologies. At the same time, it must be acknowledged that in some cases, applying existing regulations to emerging technologies is neither timely nor appropriate.
Recommend allowing Fed employees to 'hold a small amount of cryptocurrency.'
Speaking about the internal regulatory body, Michelle Bowman made a rather controversial suggestion— the Fed should consider allowing employees to hold a small amount of cryptocurrency or digital assets to 'truly understand the underlying operational logic.' She used skiing as a metaphor:
If a coach has never put on skis, I would never believe he could teach me how to ski, no matter how many books or articles he has read.
We should consider whether restricting employees' investment activities will become a major obstacle to recruiting and retaining talent with expertise in digital asset regulation, as well as whether it will hinder existing employees from better understanding this technology.
Currently, most Fed employees and their spouses are still strictly prohibited from holding any cryptocurrencies, related exchange-traded funds (ETFs), or even stocks of cryptocurrency companies. This ban originated from the Fed's comprehensive tightening of investment rules in early 2022, when three executives were found to have engaged in unusual trading during the pandemic in 2020, raising public concerns.
"The Fed's Vice Chair of Supervision Calls: Fed Employees Should Be Allowed to Hold a Small Amount of Cryptocurrency" This article was first published on (Blockcast).