Fed Chairman Backs Crypto? Here Are Crypto Activity Rules Now

The Federal Reserve just gave crypto in the US a much-needed confidence boost. In a recent testimony to Congress, Fed Chair Jerome Powell confirmed that the central bank has no objection to US banks working with cryptocurrency firms.

As long as these banks stick to proper risk management and consumer protection rules, they can safely offer crypto-related services. This comes as part of a wider effort to modernize outdated regulatory frameworks and give digital assets a fair place in traditional finance.

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Key Takeaways

1. US banks can now participate in crypto services without fearing reputational damage, as long as they follow safety rules.

2. The Fed, FDIC, and OCC are now aligned in removing “reputational risk” as a factor in bank examinations.

3. Clearer legislation on stablecoins and crypto market structure is on the horizon, signaling stronger government support.

Powell’s Statement: No Ban, Just Guidelines

In his June 24 testimony before the House Financial Services Committee, Powell made it clear: banks are not banned from engaging in crypto. In fact, they are encouraged to explore responsible innovation, as long as it does not compromise the safety and soundness of the financial system.

This isn’t new out of nowhere. Powell and the Fed have been hinting at this shift for months. Back in April, Powell pushed for clearer stablecoin rules and emphasized the need for consistent oversight.

Now, with the removal of “reputational risk” from examination manuals, banks are officially in the clear to interact with crypto firms without being penalized for the sector’s perceived image.

The reputational risk rule, once a vague and flexible tool, has often been cited to deny banking access to crypto companies. By eliminating it, the Fed aligns with other major regulators like the FDIC and OCC. This is a big step in unifying crypto policy across federal institutions.

What does this mean for banks? They can now offer services like crypto custody, payments, and even Bitcoin trading, provided they have the proper risk controls.

The Fed has promised to retrain its staff to ensure the new approach is applied consistently. This is a win not just for crypto firms, but for banks that have long wanted to participate without fear of regulatory backlash.

Read more: Jerome Powell’s Take on Rate Cut: Why It’s Still Uncertain

Stablecoin Framework and New Legislation in Motion

Alongside the regulatory update, Powell voiced support for pending crypto legislation. This includes the GENIUS Act, which creates a stablecoin framework, and the CLARITY Act, which sets structure for broader crypto markets. Both bills are still being debated in Congress but could become law by the end of 2025.

Powell described these legislative moves as a “great thing,” highlighting how the US needs a stable, predictable framework for digital assets.

This is especially relevant for stablecoins, which he previously described as potentially important parts of the future payments ecosystem.

The GENIUS Act has already passed the Senate with bipartisan support. If it also clears the House, President Trump is expected to sign it into law this summer.

Meanwhile, the CLARITY Act is still under review but has momentum. Powell’s comments show that the Fed supports clear boundaries that allow innovation while protecting the economy.

Powell also addressed concerns around “debanking,” which involves denying services to customers in specific industries like crypto.

He admitted that over the course of 2024, the Fed realized this was a real issue. The Fed’s updated stance sends a message: it is not here to block banks from exploring crypto, only to ensure they do so responsibly.

These regulatory shifts could pave the way for more mainstream adoption. Big banks, including JPMorgan, are already allowing clients to access Bitcoin. As rules solidify, we might see even more traditional financial institutions stepping into crypto with confidence.

Read more: Jerome Powell Termination: Analyzing Its Impact on Crypto

The Bigger Picture: A Shift in Tone Across the Board

Powell’s statements and the Fed’s policy updates reflect a larger trend happening in Washington and Wall Street. After years of hesitation, major financial players are warming up to the idea that crypto has a legitimate role in the modern economy.

This shift didn’t happen overnight. The crypto industry has weathered several storms, including major collapses and a lack of regulatory clarity.

After the chaos of 2022, regulators took a very cautious approach. Now, with more guardrails in place, the tone is changing from skepticism to cautious support.

Powell acknowledged this shift during his congressional appearance. He noted that while the Fed is still focused on maintaining financial stability, it also recognizes the changing landscape.

Stablecoins, for example, could soon play a major role in the payment system, which is why clear rules are needed.

The focus now is on building a regulatory foundation that supports innovation without compromising safety. This means:

1. Giving banks the green light to interact with crypto under proper controls.

2. Passing laws that create structured markets and define the legal status of digital assets.

3. Supporting federal agencies as they coordinate their oversight efforts.

Despite some ongoing economic uncertainty and debates around interest rates, the regulatory stance on crypto has become more forward-looking. The Fed’s backing may not solve every challenge overnight, but it does provide a stable framework for progress.

Read more: Key Takeaways from Jerome Powell’s Recent Speech After the Interest Rate Announcement

Conclusion

The Federal Reserve’s updated stance on crypto is a major step toward integrating digital assets into the US banking system. 

By removing the reputational risk clause and supporting new legislation, Chair Powell has signaled that crypto is no longer the outsider in finance. Instead, it is becoming part of the financial mainstream, as long as it is handled responsibly.

Banks now have the regulatory clarity they need to participate in crypto markets, and lawmakers are taking concrete steps to support innovation with safety in mind. As this new chapter unfolds, it’s more important than ever to choose reliable platforms for your crypto activities.

Bitrue offers a secure and easy-to-use exchange where you can trade, store, and manage your digital assets with confidence. With enhanced protections and a user-first approach, Bitrue helps you navigate the evolving crypto landscape safely.

FAQ

Can US banks now offer crypto services?

Yes, as long as they follow proper risk management and consumer protection standards. The Federal Reserve has removed barriers that previously discouraged banks from working with crypto firms.

What is the GENIUS Act?

The GENIUS Act is a new bill that would create a legal framework for issuing and trading stablecoins in the US. It has passed the Senate and may become law soon.

Why is the removal of reputational risk important?

This change eliminates a vague rule that examiners used to block crypto partnerships. Without it, banks can make decisions based on real risk, not public perception.

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