Fed Holds Rates, Powell Welcomes Crypto Banks

Federal Reserve Holds Interest Rates Steady, but Crypto Market Unfazed

The Federal Reserve (Fed) has decided to keep interest rates unchanged, maintaining the target range at 4.25% to 4.5%. This decision comes after a series of three consecutive rate cuts at the end of last year. The Fed's statement highlighted that the unemployment rate has "stabilized" and the labor market is "solid," while inflation remains "somewhat elevated."

In response to a question about crypto, Fed Chair Jerome Powell stated that banks are "perfectly able to serve crypto customers" as long as they manage the associated risks effectively. Powell acknowledged that there is a higher threshold for banks engaging in crypto activities but emphasized that the Fed is not against innovation and does not want to take actions that would cause banks to terminate legal customers due to excessive risk aversion.

Powell also hinted at the need for a greater regulatory apparatus around crypto, suggesting that Congress should address this issue. He mentioned that the Fed has been working with members of Congress on various matters and that a more constructive approach for Congress would be to establish a regulatory framework for crypto.

The crypto market reacted positively to Powell's comments, with Bitcoin (BTC) rebounding 3.3% to touch $104,774.44 after initially falling 1.5% to $101,417.24 following the FOMC's announcement. As of press time, BTC was trading at $103,740.

Powell's resistance to rush into further rate cuts signals stability for the crypto market, as it indicates that the Fed is not panicking and is taking a measured approach to monetary policy. This cautious stance may help to alleviate concerns about potential market volatility and encourage investors to continue participating in the crypto market.