Jerome Powell Agrees to Collaborate with Lawmakers on Crypto Debanking Issue

| February 11, 2025

So our role with crypto really is to look at the banks and we think banks are perfectly able to serve crypto customers as long as they understand and can manage the risks and it’s safe and sound, many of our — a good number of our banks that we regulate and supervise do that. The threshold has been a little higher for banks engaging in crypto activities, and that’s because they’re so new and we don’t want to make the mistake — if you’re making a choice to conduct that activity inside a bank which is inside the Federal safety net, with deposit insurance, then you want to be pretty sure that it’s a safe and sound activity. So, we’re not against innovation, and we certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion maybe related to regulation and supervision.

In a significant development, Federal Reserve Chair Jerome Powell has expressed his willingness to work with lawmakers to address the growing concerns surrounding the debanking of cryptocurrency companies. This comes after increased scrutiny of the financial industry’s approach to crypto customers, with many arguing that banks have been closing accounts linked to digital assets.

During a recent Senate Banking Committee hearing, Senator Tim Scott, who chairs the committee, posed a direct question to Powell regarding the need for fair regulations that avoid unnecessary burdens on businesses and consumers. Powell responded affirmatively, agreeing to collaborate with lawmakers to ensure the regulatory environment is balanced and does not unfairly target the crypto sector.

Powell acknowledged the issue, emphasizing that while the Federal Reserve does not intentionally aim to restrict crypto access to banking services, regulatory actions can sometimes have unintended consequences. “We don’t intentionally do these things, but sometimes regulation leads things to happen and we need to be working on that,” Powell stated.

The hearing was part of an ongoing effort by U.S. lawmakers to tackle the growing concerns over crypto debanking. Recently, both the Senate and House have held multiple hearings, probing the practices of banks and their treatment of crypto clients. These hearings come in the wake of several high-profile instances where banks have cut ties with crypto businesses, citing concerns over regulatory compliance and potential risks.

Senator Scott, who has been vocal about the need for clarity in crypto regulations, emphasized the importance of addressing debanking in order to foster innovation while maintaining financial stability. Powell’s commitment to collaborate with lawmakers to find a solution signals that the Federal Reserve may take a more proactive role in shaping the future of cryptocurrency regulations.

Also read:Cardano (ADA) Price Soars 11.76%, Bullish Momentum Continues with Market Recovery