Market Times:

London: 8:51:30 PM

New York: 3:51:30 PM

Singapore: 4:51:30 AM


Fed Chair Urges Crypto Regulation, Warns Banks on Risk Aversion

The Federal Reserve Chair has called on the U.S. Congress to speed up the process of regulating crypto assets.

In a recent statement, Federal Reserve Chairman Jerome Powell emphasized the urgent need for comprehensive regulation of the crypto industry. Speaking at a high-profile Federal Open Market Committee press conference, Powell voiced concerns over the rapid expansion of digital assets and the potential risks they pose to financial stability and investors.  

Powell noted that examiners should avoid pressuring banks to cut ties with law-abiding customers simply because of their involvement in crypto assets. He also mentioned that Congress and the Fed have been working on this extensively. 

“We’ve actually spent a lot of time, you know, with House Financial Services, working together with them on various things, and I think that would be a very constructive thing for Congress to do,” Powell said.

The remarks followed the Federal Reserve’s decision to keep interest rates between 4.25% and 4.5% after the Consumer Price Index (CPI) report revealed that inflation was lower than many had expected. 

Powell Warns Banks Against Crypto Risks

Powell also mentioned that the central bank is not opposed to innovation when it comes to crypto assets. Addressing banking restrictions, he further noted that banks would not want to introduce policies that would cause them to part ways with fully legal customers because of excessive caution, potentially driven by regulatory worries. 

“Banks are perfectly able to serve crypto customers, as long as they understand and can manage the risks, and it’s safe and sound,” he added.

The investment banker further stated that the bar has been set slightly higher for banks involved in crypto activities due to the relatively new nature of the space. 

While still discussing crypto risks, he noted the need for better protection for individual investors, as the risks may not be fully understood. He also compared crypto to stocks and mutual funds, stating that similar consumer safeguards should be in place for all. 

Bank Working With U.S. Regulators

The report came as Morgan Stanley’s CEO, Ted Pick, announced that the banking giant is working closely with United States regulators to explore offering crypto services to its clients. 

Pick noted that Morgan Stanley is committed to navigating the regulatory landscape and collaborating with authorities to ensure its crypto offerings align with legal and compliance standards.

Chris Lion