KEY POINTS
- Powell said banks can offer crypto solutions to customers ‘as long as they understand and can manage the risks’
- He also reiterated that the Federal Reserve is ‘not against innovation’
- He said the Fed won’t take actions to urge banks to terminate ‘perfectly legal’ offerings
Bitcoin jumped late Wednesday night after U.S. Federal Reserve Chair Jerome Powell said banks can actually provide cryptocurrency services to their customers as long as risks are managed well.
Powell’s comments are crucial for the crypto industry, especially after several crypto leaders recently revealed they were “debanked” as part of the Biden administration’s alleged Operation Choke Point 2.0 (OCP 2.0) efforts.
OCP 2.0 is an alleged operation implemented by the previous government wherein banks were supposedly discouraged by regulators, in coordination with the Biden administration, to not adopt crypto solutions and prevent crypto firms from getting banked.
Powell Affirms Banks Can Offer Crypto Solutions
On Wednesday, the U.S. central bank chair said “banks are perfectly able to serve crypto customers as long as they understand and can manage the risks,” marking a stark contrast to revelations made in letters obtained by Coinbase that showed the Federal Deposit Insurance Corporation (FDIC) discouraged banks to engage in “crypto asset-related activity.”
Powell reiterated that the bar for banks has been set high if they want to offer crypto services, and banks engaging with the emerging industry should be “pretty sure it is safe and sound.”
This isn’t the first time Powell made bullish remarks about crypto. In mid-2023, he said the Federal Reserve considers payment stablecoins “as a form of money.” He also suggested at the time that the central bank should be given a “robust federal role” in classifying future forms of money.
Central Bank is Pro-Innovation: Powell
Among the most critical comments Powell made Wednesday is regarding innovation – a key foundation of the broader blockchain industry.
Powell clarified that the Fed isn’t against innovation, another comment that takes a different tone from the previous administration and former Securities and Exchange Commission (SEC) Chair Gary Gensler.
“We’re not against innovation, and we certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal, just because of excess risk aversion maybe related to regulation and supervision,” he said, seemingly agreeing to the crypto industry’s woes regarding regulatory overreach within U.S. financial regulators.
Bitcoin is Loving Powell’s Comments
Seemingly affected by Powell’s latest bullish remarks, Bitcoin, the world’s largest cryptocurrency by market cap, pumped nearly 3%, trading in the $104,000 highs late Wednesday.
CoinGecko
The apparent jump in BTC prices came following several weeks of multiple bloodbaths in the crypto market. At times, Bitcoin plunged below $100,000 and struggled to hold the line.
Following Powell’s comments, the crypto market is up 1.1% in the day, with some major altcoins such as Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA) riding the green wave with Bitcoin.
