#PowellRemarks Jerome Powell's recent speech highlighted the Federal Reserve's stance on cryptocurrencies, indicating that banks can offer crypto services under certain conditions. His remarks have influenced market reactions, particularly concerning Bitcoin's price volatility.
**Key Points from Powell's Speech on Crypto**
- **Regulatory Framework for Stablecoins**
- Powell emphasized the need for a legal framework as cryptocurrencies gain mainstream acceptance.
- He mentioned that banking regulations around crypto might be "partially relaxed," which could facilitate more stablecoin issuers.
- **Market Reactions**
- Following Powell's hawkish tone, Bitcoin experienced a decline, dropping approximately 2.5% shortly after his remarks.
- Analysts noted that expectations for rate cuts in upcoming Federal Reserve meetings should be tempered, which may negatively impact risk assets, including cryptocurrencies.
- **Banks and Crypto Services**
- Powell stated that banks are permitted to provide cryptocurrency services as long as they manage risks effectively.
- He expressed that the Federal Reserve does not oppose innovation in the banking sector but aims to ensure safety and soundness in these activities.
- **Concerns Over Economic Conditions**
- Powell raised concerns about stagflation, linking it to the effects of President Trump's tariffs, which could lead to higher inflation and slower economic growth.
- He acknowledged the tension between the Federal Reserve's dual mandate of promoting maximum employment and stable prices.
- **Future Regulatory Developments**
- Powell indicated that there is ongoing collaboration with Congress to establish a more robust regulatory framework for cryptocurrencies.
- He highlighted the importance of consumer knowledge regarding financial engagements, suggesting that a clearer regulatory environment would benefit all parties involved.
