Fed Official Proposes Allowing Staff Small Crypto Holdings to Enhance Understanding

The Federal Reserve’s top regulatory official, Vice Chair for Supervision Michelle Bowman, has suggested that central bank staff should be permitted to hold small amounts of cryptocurrency to improve their understanding of the technology. Speaking at the Wyoming Blockchain Symposium on August 12, 2025, Bowman emphasized that firsthand experience with digital assets could enhance regulatory oversight and better prepare Fed examiners to assess the risks and benefits of crypto-related activities [2]. Currently, Fed staff and their spouses are prohibited from owning crypto or related investment products such as ETFs or shares in crypto companies, a rule tightened in early 2022 following unusual trading activity among top officials during the early stages of the pandemic [1].

Bowman argued that allowing Fed employees to hold "de minimis" amounts of crypto would not only improve their practical understanding but also help the institution attract and retain talent in an environment where familiarity with digital assets is increasingly valuable. She noted that regulatory expertise should not be limited to theoretical knowledge, comparing the situation to teaching skiing without ever having skied [3]. By engaging directly with crypto, staff could better grasp the mechanics of ownership and transfer processes, enabling more informed assessments of institutions involved in crypto activities.

The proposal reflects a broader call for a cultural shift in financial regulation, with Bowman urging regulators to move beyond an overly cautious mindset and embrace new technologies like blockchain and artificial intelligence [2]. While acknowledging the risks associated with innovation, she stressed that these must be balanced against the potential benefits, including improved efficiency and speed in financial services [3]. Her comments align with a growing recognition that the financial system must evolve to remain relevant to consumers and businesses.

Bowman also highlighted the importance of collaboration between the Fed and the private sector, encouraging banks to share knowledge about digital assets and blockchain with regulators. This, she argued, would help shape a reliable and durable regulatory framework that supports innovation while ensuring safety and soundness [3]. Earlier in August, she acknowledged that some crypto firms had faced challenges due to regulatory uncertainty, signaling a potential openness to addressing these issues and fostering a more accommodating environment for the sector [5].

While the Fed has not yet outlined specific guidelines on allowable crypto holdings, the broader message is clear: the central bank is willing to explore new approaches to integrating emerging technologies into its operations and regulatory structure. This marks a notable shift in the institution’s stance toward digital assets and suggests a more flexible regulatory environment under the Trump administration [4].

Source:

[1] https://m.fastbull.com/news-detail/feds-bowman-suggests-allowing-central-bank-staff-to-4340359_0

[2] https://investinglive.com/centralbank/bowman-de-minimis-crypto-holdings-would-allow-fed-staff-to-better-understand-products-20250819/

[3] https://www.mitrade.com/au/insights/news/live-news/article-3-1052372-20250820

[4] https://www.federalreserve.gov/newsevents/speech/bowman20250819a.htm

[5] https://cryptoslate.com/federal-reserve-says-us-banks-can-now-serve-crypto-without-fear-of-penalties/