Federal Reserve Chair Jerome Powell vocalized support for crypto legislation before Congress on Tuesday, signaling that the U.S. would benefit from bills currently under consideration.
“It’s a great thing that bills are moving,” Powell said. “We need a stablecoin framework.”
Last week, Senate lawmakers passed the GENIUS Act, a bill that would establish a framework for issuing and trading stablecoins. The bill received bipartisan support, and it could be signed into law by U.S. President Donald Trump this summer, if passed by the House. Meanwhile, House lawmakers are weighing the CLARITY Act, a crypto markets structure bill.
Powell’s stamp of approval on a stablecoin framework follows guidance from the Fed on Monday. The Fed said in a statement that it would no longer consider “reputational risk” when examining banks, a factor regulators cited against crypto-curious banks in the past.
“Our view is that banks get to decide who their customers are,” Powell said, echoing comments that he made in January. “Banks are also free to conduct crypto activities, as long as they do so in a way that is protective of safety and soundness.”
For months, Republican lawmakers have investigated accusations of “debanking” under the Biden administration, seeking clarity on whether certain individuals and entities were cut off from the financial system due to their involvement in specific industries, including crypto. Powell said that the Fed became increasingly aware of debanking last year.
“Over the course of 2024, [we] came to the view that this was a serious problem that we need to address,” he said, adding that the issue has become more pressing in “the last couple of years.”
Since Trump’s reelection, traditional finance institutions have embraced the crypto space as lawmakers inch toward clearer rules. Among signs of banks’ newfound openness, JP Morgan CEO Jamie Dimon, a crypto skeptic, said last month that clients can now purchase Bitcoin.
Powell advocated for stricter rules for stablecoins in 2021, saying they should be regulated “in comparable ways” to bank deposits and money market mutual funds, because they could become “a significant part of the payments universe” one day.
Although the U.S. central bank has been monitoring developments in the crypto space for years, especially when it comes to central bank digital currency, Powell noted that firms on Wall Street have shifted their stance on the technology more recently.
“What I do see is a very significant change in the tone, and it really does reflect [the] evolving thinking and the evolving status of the crypto industry,” he said. “I would expect, over time, we’ll see more activity.”
Edited by James Rubin
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