Fed Chair Powell Signals Softer Crypto and Banking Rules, Supports Stablecoin Framework
Federal Reserve Chair Jerome Powell signaled a potential softening in cryptocurrency and banking regulations, indicating a major shift in the Fed’s stance toward the digital asset space.
Speaking at the Economic Club of Chicago on Wednesday, Powell acknowledged crypto’s move into the financial mainstream and emphasized the growing need for regulatory clarity—especially when it comes to stablecoins.
“There’ll be some loosening of that [crypto-related banking guidance],” Powell said, referencing the earlier tight restrictions placed on banks working with digital assets. He emphasized the Fed’s aim to “foster innovation in a way that preserves safety and soundness” in the broader financial system.
Powell explained that earlier caution stemmed from the scandals and failures that once plagued the crypto sector. But now, with growing traction around stablecoins and bipartisan momentum in Congress, the regulatory landscape is shifting.
“Congress is again looking at both the Senate and the House [for] a framework, a legal framework for stablecoins,” he noted. “That’s a good idea. We need that.”
Stablecoins—digital assets backed by fiat currencies—now play a key role in the crypto economy by enabling fast transactions and offering U.S. dollar exposure across digital platforms.
Powell stressed that any legislative framework must come with “consumer protections of the typical sorts and transparency.” His remarks follow a broader review of regulatory policy, including how the Fed approaches inflation and tools like quantitative easing.
Still, his statements on digital assets mark one of the clearest signals to date that U.S. regulators are prepared to ease their stance, particularly as crypto sees increased institutional adoption.
Such easing could pave the way for banks to hold crypto on behalf of customers or facilitate payments in stablecoins—developments the industry has long anticipated.
Powell’s comments also echo the growing sentiment in Washington that crypto’s integration should be met with proportionate, risk-based oversight rather than sweeping restrictions.
Reacting to the remarks, Sid Powell, CEO of Maple Finance, told Benzinga:
“Powell discusses the need for a legal framework for stablecoins. This is a shift in tone from prior years and 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 Fed’s evolving approach suggests changes may soon come to areas like crypto custody and stablecoin settlement—policy shifts that both regulators and industry players will be watching closely.
