Emily Walker
Jerome Powell, the Chair of the Federal Reserve, shared insights yesterday indicating that US banks are welcome to engage with cryptocurrency customers, as long as they properly manage the associated risks. His remarks were made during a press conference for the Federal Open Market Committee (FOMC), addressing questions regarding the Fed’s view on banking in the crypto space.
Powell stated, “Banks can certainly serve customers in the crypto sphere as long as they grasp the risks involved.” He emphasized, “We support innovation and do not want to see banks drop legitimate clients due to overly cautious regulations.”
Crypto Community’s Optimism
Following Powell’s announcement, notable members of the cryptocurrency community expressed their approval, viewing it as a positive signal for banks that have been reluctant to offer crypto-related services. Nic Carter, a partner at Castle Island Ventures and co-founder of Coinmetrics.io, tweeted, “A significant tonal shift. OCP2.0 has ended. The Fed was previously at the center of that.”
Hunter Horsley, CEO of Bitwise Asset Management, shared a similar perspective, stating, “Banks will play a crucial role in the growth of crypto by 2025. A new mainstream era is starting.” Additionally, David Lawant, research head at FalconX, noted, “A huge wave is coming over the next 6-18 months, and many are unaware of its scale.”
Joe Consorti from They pointed out the wide range of services banks could offer: “Banks can manage bitcoin for clients, develop structured financial products related to bitcoin, and facilitate bitcoin purchases. It seems even Powell is more open-minded now—there’s a shift in sentiment.” Bitcoin analyst Dylan LeClair also highlighted the convergence of market dynamics and regulatory changes, stating, “With FASB guidelines, the repeal of SAB 121, and in-kind ETF redemptions, banks are ready to join in.”
Powell’s remarks come at a critical juncture, as various regulatory and accounting updates are set to change the way banks approach digital assets. The Financial Accounting Standards Board (FASB) rolled out a uniform accounting framework for cryptocurrencies in August 2024, providing essential clarity on how banks should report their crypto assets.
Previously, the Securities and Exchange Commission (SEC) had introduced Staff Accounting Bulletin (SAB) 121 in March 2022, mandating that firms classify customer-held cryptocurrencies as liabilities. However, this rule was replaced on January 23, 2025, with SAB 122, simplifying the custody of digital assets and reducing reporting complexities, which is likely to encourage more banks to venture into crypto.
Additionally, under the Trump administration, in-kind redemptions for ETFs, including Bitcoin ETFs, are on the horizon. This system would allow ETF shares to be exchanged for the actual assets rather than cash, aligning well with Bitcoin’s decentralized essence and offering potential tax advantages. BlackRock has also sought a modification from the SEC for its spot Bitcoin ETF.
These regulatory advancements, together with Powell’s supportive remarks, indicate a significant shift for banks contemplating entry into the cryptocurrency market. Observers believe that with the removal of barriers like SAB 121 and the introduction of clear FASB regulations, US banks could emerge as key players in the forthcoming crypto adoption wave.
At the time of writing, the overall cryptocurrency market capitalization was $3.49 trillion.