tl;dr
Federal Reserve Chair Jerome Powell stated that banks can serve crypto clients if they manage associated risks effectively. Powell emphasized the Fed's openness to financial innovation but acknowledged the cautious approach due to the newness of crypto activities. He addressed allegations of crypto ...
Federal Reserve Chair Jerome Powell emphasizes banks' freedom to serve crypto clients while managing associated risks, signaling cautious openness to innovation in financial markets. Powell stated that banks can serve crypto clients if they manage associated risks effectively. He emphasized the Fed's openness to financial innovation but acknowledged the cautious approach due to the newness of crypto activities. Powell addressed allegations of crypto firms facing banking access issues, affirming the Fed's stance against terminating legal customers. The mention of crypto in Powell's speech led to a market rally, with Bitcoin prices rebounding. This comes after the FDIC interim Chair's acknowledgment of debanking crypto firms and the House Committee's probe into such cases. As of January 29, 2025, Bitcoin is valued at $103,656.40 with a 2.98% increase in the past 24 hours. The total crypto market is valued at $3.51 trillion with a 24-hour volume of $122.93 billion and Bitcoin dominance at 58.53%.
Federal Reserve Chair Jerome Powell stated that banks are free to serve with crypto, provided they effectively manage the associated risks. During his speech following the Federal Open Market Committee (FOMC) meeting, Powell added: “The threshold has been a little higher for banks engaging in crypto activities, and that’s because they’re so new.” Despite this cautious approach, Powell emphasized that the Fed remains open to innovation in financial markets. Additionally, the Fed chair quickly addressed allegations that crypto firms are having difficulties accessing banking services in the US, stating that the Fed is not interested in terminating legal customers. Powell added that the Fed’s role in examining the relationship between banks and crypto is to analyze banks. He also acknowledged the industry’s regulatory challenges and said “a greater regulatory apparatus” would be helpful. Despite not endorsing crypto, the Fed chair’s brief mention led to optimism in the market, causing many assets to rally after the day’s slump. Bitcoin (BTC) fell 1.5% to $101,417.24 after the FOMC revealed no interest rate cuts this month, potentially postponing further cuts until June. However, during Powell’s speech, especially after the mention of crypto, the BTC price rebounded 3.3% to touch $104,774.44. Based on CryptoSlate data, the flagship crypto was trading at $103,740 as of press time.
The Fed chair’s speech comes nearly three weeks after the Federal Deposit Insurance Corporation (FDIC) interim Chair Travis Hill acknowledged the agency’s role in “debanking” crypto firms. Although Hill did not mention “Operation Chokepoint 2.0,” he cited crypto-related businesses losing access to banking services without reasoning, calling such efforts “unacceptable.” Operation Chokepoint 2.0 is an alleged effort by former President Joe Biden’s administration to hinder the crypto industry growth in the US by making it difficult to access banking services. Hill also vowed to change the FDIC’s course and prevent future cases in which banks sideline crypto firms. The House Committee on Oversight and Government Reform is also probing the alleged cases of crypto firms being debanked. On Jan. 24, the Committee sent a formal letter to several entities related to crypto requesting evidence and accounts of such cases.
At the time of press 10:27 pm UTC on Jan. 29, 2025, Bitcoin is ranked #1 by market cap, and the price is up 2.98% over the past 24 hours. Bitcoin has a market capitalization of $2.05 trillion with a 24-hour trading volume of $47.32 billion.
At the time of press 10:27 pm UTC on Jan. 29, 2025, the total crypto market is valued at at $3.51 trillion with a 24-hour volume of $122.93 billion. Bitcoin dominance is currently at 58.53%.