Federal Reserve Chair Jerome Powell addressed concerns about cryptocurrency regulation following the central bank’s decision to keep interest rates unchanged in the United States.
During a press conference on January 29, after the Federal Open Market Committee (FOMC) meeting, Powell stated that banks were permitted to serve crypto-related clients as long as they appropriately managed associated risks. He emphasized that existing regulations already allowed financial institutions under the Fed’s supervision to engage with crypto businesses. However, he noted that banks wishing to participate directly in crypto activities faced stricter oversight.
“We support innovation and do not want to take measures that would lead banks to drop legitimate customers simply due to excessive risk aversion stemming from regulatory or supervisory concerns,” Powell remarked.
Commenting on the broader regulatory landscape for digital assets, Powell suggested that enhanced oversight would be beneficial.
“I believe a more comprehensive regulatory framework for crypto would be useful, and it’s something Congress has been actively working on. We have collaborated extensively with lawmakers on various aspects, and I think it would be a positive step for Congress to take action in this space,” he said.
Powell’s comments came in response to a question regarding a Financial Stability Oversight Council report from December, which highlighted the potential risks posed by stablecoins to the financial system. Powell, who has led the central bank since 2018 after being appointed during former President Donald Trump’s administration, is set to remain in his position until May 2026.
Cryptocurrency markets frequently respond to Federal Reserve policy announcements. Prior to the FOMC meeting, Trump had urged the Fed to lower interest rates, though the president lacks the authority to enforce such decisions. Following the Fed’s announcement, Bitcoin experienced a brief surge, climbing approximately 3% in 24 hours and momentarily surpassing $104,000.
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