Federal Reserve Chair Jerome Powell indicated on Wednesday that U.S. banks may soon see relaxed restrictions regarding cryptocurrency engagement, signaling a notable shift in regulatory approach as digital assets continue to integrate into the mainstream financial system.
Speaking at the Economic Club of Chicago on April 17, Powell acknowledged the evolution of the crypto landscape from its troubled past to its current, more established state. “We took a pretty conservative, other bank regulators took an even more conservative perspective on the guidance and rules we imposed on banks,” Powell said. “I think there will be some loosening of that.“
JUST IN: 🇺🇸 Federal Reserve Chair Jerome Powell thinks there will be loosening of bank rules on crypto and stablecoins as it is becoming more mainstream. pic.twitter.com/B0drnree8f
— Bitcoin Magazine (@BitcoinMagazine) April 16, 2025
A Changing Regulatory Landscape
Powell’s comments come amid a broader shift in U.S. regulatory attitude toward digital assets since President Donald Trump took office in January. Federal banking agencies have already begun adjusting their stance, with the Federal Deposit Insurance Corporation (FDIC) announcing plans to rescind previous guidance and provide new clarity allowing supervised institutions to engage in permissible crypto-related activities without requiring prior approval.
Similarly, the Office of the Comptroller of the Currency has affirmed that crypto-related activities are permitted within the federal banking system, further indicating the regulatory thaw.
Powell emphasized that any relaxation of rules would be approached carefully, with regulators seeking to balance innovation with consumer protection and financial stability. “We’ll try to do it in a way that preserves safety and soundness, but that permits and fosters appropriate innovation, but does so in a way that again doesn’t put consumers at risk in ways they don’t understand or make banks less safe and sound,” he stated.
The Journey from Skepticism to Acceptance
The Fed Chair’s remarks reflect a recognition of crypto’s maturation despite its troubled history. Powell referenced the sector’s past challenges, noting “a wave of failures and fraud” that prompted regulators’ initial conservative approach. The crypto industry experienced significant turbulence in 2022 and 2023, with several high-profile business failures that reinforced regulators’ cautious stance.
However, Powell suggested that the climate is changing as digital assets become more mainstream, necessitating a more nuanced regulatory framework. This evolution marks a significant departure from previous years, when regulatory bodies viewed crypto with heightened skepticism.
Also Read: Trump Says It’s the Perfect Time for Fed Chair Powell to Cut Interest Rates
Stablecoins in Focus
A key component of this evolving approach concerns stablecoins—digital assets pegged to fiat currencies that have grown into a significant part of the crypto economy. Powell specifically highlighted ongoing congressional efforts to establish a regulatory framework for stablecoins.
“Stablecoins are a digital product that could actually have fairly wide appeal and should contain consumer protections of the typical sorts and transparency, and that’s what the Senate and the House are working on,” Powell said, calling these legislative efforts “a good idea” and emphasizing that “we need that.“
The comments reinforce Powell’s previous statements recognizing stablecoins as “a form of money” requiring robust federal oversight. Currently, the combined value of all stablecoins is approximately $227 billion, with dollar-pegged tokens USDC and USDT accounting for over 88% of that market.
Legislative Momentum
Powell’s remarks coincide with accelerating legislative activity around digital assets. Both the House and Senate have passed stablecoin bills out of their respective committees, and President Trump has expressed interest in signing such legislation as soon as possible.
Bo Hines, executive director of the President’s Council of Advisers on Digital Assets, recently indicated that a comprehensive stablecoin bill was a top priority for the current administration, suggesting that final legislation could reach the president’s desk within the next two months.
This legislative momentum marks a significant shift from previous efforts that Powell characterized as unsuccessful. “We worked with Congress to try to get a legal framework for stablecoins, which would have been a nice place to start,” he recalled of earlier attempts. “We were not successful.“
Market Implications
Despite Powell’s openness to relaxing crypto banking rules, his speech included warnings about broader economic concerns that temporarily dampened cryptocurrency markets. Bitcoin, which had been rallying toward a potential challenge of the $86,000 level, reversed course during U.S. afternoon trading hours on Wednesday as Powell raised stark concerns about the effects of President Trump’s tariff policies.
“The level of the tariff increases announced so far is significantly larger than anticipated,” Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.” These comments suggesting potential stagflation—weak economic activity alongside rising inflation—caused Bitcoin to fall about 2.5% in the minutes following Powell’s remarks.
Industry Response
The crypto industry has generally welcomed Powell’s indication of a regulatory shift. Sid Powell, CEO of Maple Finance (no relation to the Fed Chair), noted the change in tone, stating that it “reflects a maturity of the space, with Powell acknowledging that stablecoins are a sector that could have wide implications for the economy and US users.“
The potential easing could open doors for U.S. banks to custody crypto assets or process payments in stablecoins—developments that many in the industry have long anticipated.
The Road Ahead
While signaling a more accommodating approach to crypto, Powell emphasized that any regulatory changes would maintain focus on consumer protection, requiring “consumer protections of the typical sorts and transparency.” This suggests that while rules may loosen, they will not disappear entirely, as regulators seek to balance innovation with risk management.
The Fed Chair’s comments represent an important inflection point in the relationship between traditional banking and digital assets. As cryptocurrencies continue their journey from the fringes to the mainstream of financial services, regulatory frameworks appear poised to evolve accordingly, potentially opening new avenues for institutional adoption and integration.
The shift also aligns with the current administration’s broader pro-crypto stance, which has included the establishment of the President’s Council of Advisers on Digital Assets and various policy shifts aimed at positioning America as a digital asset leader.
As the regulatory landscape continues to develop, banks and cryptocurrency businesses alike will be watching closely to see how Powell’s words translate into concrete policy changes that could reshape the intersection of traditional finance and digital assets.
Want real-time updates on Bitcoin, Ethereum, and blockchain trends? Crypto News Today delivers breaking crypto news, expert insights, and price movements to keep you informed.
