🛡️Powell Calls for Stricter Cryptocurrency Regulation, Warns Banks Not to 'Overly Avoid Risk'

On January 29, Federal Reserve Chairman Powell called for stronger regulation of cryptocurrencies at a press conference. Powell stated that it would be beneficial if cryptocurrencies had more robust regulatory bodies. He also mentioned that Congress and the Federal Reserve have been working to address this issue.

Powell further noted that the Federal Reserve has spent a lot of time collaborating with the House Financial Services Committee, which has been very constructive for Congress. He made it clear that while the Federal Reserve supports innovation in cryptocurrencies, banks should not close accounts of legitimate customers due to excessive risk aversion.

Chairman Powell also mentioned that banks are fully capable of providing services to cryptocurrency clients, but since the cryptocurrency field is relatively new, the barriers to entry for related activities might be slightly higher. He pointed out that individual investors need stronger protective measures because the risks associated with cryptocurrencies may not yet be fully understood. He compared cryptocurrencies to stocks and mutual funds, suggesting that similar consumer protection mechanisms should be adopted to safeguard investors' rights.

Additionally, during the first Federal Open Market Committee meeting since the Trump administration took office, Powell stated that concerns over "de-banking" have risen to the highest levels of government. Powell remarked that as long as banks understand and can manage risks, and are safe and reliable, they are fully capable of providing cryptocurrency services to customers.

He also avoided directly responding to recent comments or actions from Trump in the past few weeks. He stated that he had “no contact” with the new president and noted that differences would harm the credibility of the Federal Reserve.

More economic data is expected to be released this week, including the fourth quarter GDP growth annualized estimate to be published on Thursday, while the December Core Personal Consumption Expenditures (PCE) report will be released on Friday.

Meanwhile, during the Asian trading session on Thursday morning, the cryptocurrency market saw a slight increase, with Bitcoin leading the way and rising above $105,000.

💬 What do you think of Chairman Powell's remarks? Will the future of cryptocurrencies change as a result? Do you think stronger regulation is a good thing or a bad thing? Leave your thoughts in the comments!