Federal Reserve Chair Jerome Powell said Wednesday that the U.S. is preparing to relax certain cryptocurrency and banking regulations, marking a notable shift in tone toward the digital asset sector.
What Happened: Speaking at the Economic Club of Chicago on Wednesday, Powell acknowledged that the crypto market has become more mainstream and emphasized the need for a clear regulatory framework, particularly around stablecoins.
“There’ll be some loosening of that [crypto-related banking guidance],” Powell said, referring to previously strict rules imposed on banks engaging with crypto assets.
He added that the goal would be to foster innovation “in a way that preserves safety and soundness” in the financial system.
Powell cited the failures and scandals that once dominated the crypto landscape as a reason for the Fed’s initial cautious stance.
But with stablecoins gaining traction and bipartisan discussions underway in both chambers of Congress, Powell said the environment is changing.
“Congress is again looking at both the Senate and the House [for] a framework, a legal framework for stablecoins,” he said. “That’s a good idea. We need that.”
Stablecoins, digital assets pegged to fiat currencies, have grown into a significant part of the crypto economy, facilitating transactions and offering dollar exposure in the digital ecosystem.
Powell stressed that any framework must include “consumer protections of the typical sorts and transparency.”
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Why It Matters: His comments come amid a broader review of financial regulatory policy, including how central banks manage inflation and monetary policy tools like quantitative easing.
But Powell’s remarks on digital assets are among the clearest signals yet that the Fed may ease its grip on crypto-related banking restrictions, particularly as the sector becomes more institutionalized.
The potential easing could open the door for U.S. banks to custody crypto assets or process payments in stablecoins—something many in the industry have long awaited.
Powell’s remarks also reinforce the growing view in Washington that crypto’s integration into the financial system must be met with proportional, risk-based oversight rather than blanket restrictions.
Speaking with Benzinga, Sid Powell, CEO of Maple Finance, welcomed Powell’s remarks, noting, “Powell discusses the need for a legal framework for stablecoins. This is a shift in tone from prior years and reflects a maturity of the space, with Powell acknowledging that stablecoins are a sector that could have wide implications for the economy and US users.”
Powell’s comments suggest potential easing in areas like bank custody of crypto assets and acceptance of stablecoins, areas the industry will closely watch.
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Photo courtesy of the Federal Reserve.
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