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 in the course of 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 capable of serve crypto clients so long as they perceive and may handle the dangers,” Powell stated. “We’re not towards innovation, and we actually don’t need to take actions that might trigger banks to terminate clients 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, deciphering it as a inexperienced mild for banks which have been hesitant to embrace crypto providers. Nic Carter, a associate at Fort Island Ventures and co-founder of blockchain information aggregator Coinmetrics.io, commented by way of 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 can 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 development 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 clients 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-Type redemptions for ETFs. Banks are right here.”
Powell’s feedback arrive at a second when a number of regulatory and accounting modifications are poised to reshape how banks deal with digital belongings. 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 element for banks contemplating providing crypto providers.
The Securities and Change Fee (SEC) had beforehand imposed Workers Accounting Bulletin (SAB) 121 in March 2022, requiring monetary companies to file 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 belongings, eradicating a considerable reporting burden and paving the best way for extra monetary establishments to interact in crypto.
Furthermore, in-kind redemptions for exchange-traded funds (ETFs), particularly Bitcoin ETFs, are set to change into a actuality underneath the Trump administration. As a substitute of utilizing money, this mechanism permits ETF shares to be exchanged for the underlying belongings—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 recommend that, with obstacles like SAB 121 eliminated and clear FASB guidelines in place, US banks might change into main contributors within the subsequent wave of crypto adoption.
At press time, the entire crypto market cap stood at $3.49 trillion.
Featured picture created with DALL.E, chart from TradingView.com