Fed Endorses Crypto Bills, Lifts Banking Restrictions

In a significant development, Washington is taking steps to assert control over the crypto ecosystem, marking a potential turning point for the industry. On June 18, Jerome Powell, the chairman of the Federal Reserve, expressed clear support for two landmark bills focused on stablecoins and the broader crypto market. This stance comes amidst a shifting political landscape in the United States, where the industry has long awaited a solid and predictable legal framework.

Powell's endorsement of the legislative progress on crypto was described as "a great thing," emphasizing the need for a specific framework for stablecoins. This shift in the Fed's strategy contrasts with its previous cautious approach. The bipartisan GENIUS Act, which aims to regulate stablecoins at the federal level, was recently approved by the Senate with broad political support. The bill provides for a clear federal framework for issuing and trading stablecoins, with centralized regulatory oversight, reserve and transparency requirements to ensure the stability and solvency of stablecoin issuers, and a rare political consensus supported by Donald Trump, who called the bill "incredible" and presented it as a lever for making the United States "the undisputed leader of crypto."

This unprecedented alignment between the Fed, Congress, and the executive could speed up the adoption of a long-awaited legal framework by the industry. For many industry players, the Fed’s recognition of the importance of such a framework is a decisive, even historic, signal. It could trigger a new cycle of institutional investment and give the United States a strategic advantage in the international digital currency competition.

Beyond the question of stablecoins, Jerome Powell also announced a strategic shift by stating that the Fed would no longer "take reputational risk into account" in assessing banking activities. This decision has major repercussions, as the notion of reputational risk has been invoked in recent years to justify excluding clients or partners linked to crypto. Powell specified that banks are free to conduct crypto-related activities, provided they do so in a way that preserves safety and financial soundness. This new approach comes amid investigations by Republicans into alleged "banking exclusion" cases under the Biden administration, where some entities were reportedly denied banking access due to their crypto-related activities.

Powell acknowledged the phenomenon, stating that during 2024, the Fed came to the conclusion that this was a serious problem that needed to be resolved. This paradigm shift seems to already be producing effects. JP Morgan, through Jamie Dimon, a known bitcoin critic, confirmed that its clients can now buy BTC via the bank. These signals confirm a gradual realignment of the traditional financial system with crypto market logic. By recognizing past mistakes linked to banking exclusion, the Fed opens a clearer space for collaboration between financial institutions and blockchain companies. This could encourage a massive return of banks to the American crypto ecosystem as rules become clearer. If the trend is confirmed, it aligns with Europe's implementation of MiCA and Asia's acceleration of its own projects.