Federal Reserve Chair Jerome Powell delivered remarks yesterday suggesting that US banks can freely have interaction with crypto shoppers—supplied they perceive and handle the inherent dangers. Powell’s feedback got here through the Federal Open Market Committee (FOMC) press convention, the place he addressed queries in regards to the Fed’s stance on crypto banking.
“Banks are completely in a position to serve crypto prospects so long as they perceive and might handle the dangers,” Powell stated. “We’re not towards innovation, and we actually don’t wish to take actions that may trigger banks to terminate prospects who’re completely authorized simply because extra threat aversion could also be associated to regulation and supervision.”
Constructive Reactions From Crypto Business
Inside hours, key figures in the neighborhood provided widespread reward for Powell’s assertion, decoding it as a inexperienced mild for banks which were hesitant to embrace crypto companies. Nic Carter, a accomplice at Fort Island Ventures and co-founder of blockchain information aggregator Coinmetrics.io, commented through X, “Immense tonal shift. OCP2.0 over. that is notably notable as a result of my understanding is the Fed particularly was the nexus of OCP2.0.”
This sentiment was echoed by Hunter Horsley, CEO of Bitwise Asset Administration, who tweeted, “Banks will probably be a significant catalyst for crypto in 2025. Mainstream period starting.” In the meantime, David Lawant, head of analysis at FalconX, remarked, “Huge wave incoming over subsequent 6-18 months. Most aren’t conscious of the size of it.”
Joe Consorti, head of progress at They, underscored the potential breadth of financial institution choices: “Banks can custody bitcoin on behalf of shoppers, create structured bitcoin monetary merchandise, and permit prospects to purchase bitcoin. Even Powell isn’t badmouthing it anymore. Vibe shift.” Bitcoin analyst Dylan LeClair additionally signaled the convergence of regulatory and market forces, stating, “FASB + repeal of SAB 121 + In-Variety redemptions for ETFs. Banks are right here.”
Powell’s feedback arrive at a second when a number of regulatory and accounting adjustments are poised to reshape how banks deal with digital property. In August 2024, the Monetary Accounting Requirements Board (FASB) launched a standardized framework for accounting cryptocurrencies on firm steadiness sheets. This was a landmark step, because it establishes readability on reporting practices—a vital part for banks contemplating providing crypto companies.
The Securities and Trade Fee (SEC) had beforehand imposed Workers Accounting Bulletin (SAB) 121 in March 2022, requiring monetary companies to document customer-held cryptocurrencies as liabilities on their steadiness sheets. On January 23, 2025, the SEC repealed this rule by way of SAB 122. This transfer simplifies the custody course of for digital property, eradicating a considerable reporting burden and paving the way in which for extra monetary establishments to have interaction in crypto.
Furthermore, in-kind redemptions for exchange-traded funds (ETFs), particularly Bitcoin ETFs, are set to turn out to be a actuality underneath the Trump administration. As an alternative of utilizing money, this mechanism permits ETF shares to be exchanged for the underlying property—aligning easily with Bitcoin’s decentralized nature and providing potential tax advantages. BlackRock lately utilized for a rule change on the SEC for its spot Bitcoin ETF.
Taken collectively, these regulatory evolutions—coupled with Powell’s supportive tone—sign a turning level for banks contemplating entry into crypto markets. Business observers counsel that, with obstacles like SAB 121 eliminated and clear FASB guidelines in place, US banks may turn out to be main members within the subsequent wave of crypto adoption.
At press time, the whole crypto market cap stood at $3.49 trillion.
Featured picture created with DALL.E, chart from TradingView.com