Jerome Powell Signals Green Light for Banks to Engage with Crypto

Federal Reserve Chairman Jerome Powell has clarified that banks are free to serve cryptocurrency clients—provided they effectively manage the associated risks. His remarks highlight the evolving relationship between traditional banking institutions and the digital asset market.

Powell’s statement coincides with the Fed’s decision to maintain interest rates at 4.25%–4.5%, following three consecutive rate cuts in late 2024. As the central bank continues to assess economic conditions, cryptocurrency’s role in mainstream finance is becoming harder to ignore.

Banks and Crypto: A New Era?

During a press briefing, Powell addressed concerns about the stability risks linked to crypto speculation. He reaffirmed that the Federal Reserve’s primary role is to oversee banks, not dictate which industries they serve.

“Banks are fully capable of serving crypto customers as long as they understand and mitigate the risks,” Powell said, emphasizing the need for responsible engagement.

His comments come on the heels of a major regulatory shift. The Securities and Exchange Commission (SEC) recently replaced Staff Accounting Bulletin (SAB) 121 with SAB 122, easing restrictions on banks offering crypto custody services. This regulatory adjustment could accelerate institutional adoption and deepen crypto’s integration into the financial system.

While Powell acknowledged that several banks under the Fed’s supervision are already involved in crypto-related activities, he reiterated that regulatory standards remain stringent. He stressed that institutions must exercise caution, particularly when operating within the federal safety net, which includes deposit insurance.

“We support innovation and don’t want to see banks sever ties with legitimate customers simply due to excessive risk aversion,” Powell added.

Crypto’s Growing Acceptance

The crypto industry has welcomed Powell’s remarks as a positive step toward mainstream adoption. Many believe banks will play a pivotal role in accelerating crypto’s expansion in 2025.

“Banks will be a major catalyst for crypto in 2025. Mainstream era beginning,” wrote Bitwise CEO Hunter Horsley on X (formerly Twitter).

Meanwhile, Bitcoin has rebounded after a volatile week, climbing 2.24% in the past 24 hours to trade at $105,066. As regulatory clarity improves and institutional support strengthens, the stage appears set for crypto’s continued ascent in the global financial landscape.