Powell Backs Crypto Regulation, Bitcoin Rallies

Federal Reserve Chair Jerome Powell has expressed support for a stronger regulatory framework around cryptocurrency, stating that banks can serve crypto clients provided they manage risks adequately. In a speech following the Federal Open Market Committee (FOMC) meeting, Powell acknowledged the challenges faced by crypto firms in accessing banking services and emphasized the need for a greater regulatory apparatus to address these issues.

Powell's remarks come amid allegations of "Operation Chokepoint 2.0," an alleged effort by the Biden administration to hinder the crypto industry's growth by making it difficult for crypto firms to access banking services. The Federal Deposit Insurance Corporation (FDIC) interim Chair Travis Hill has acknowledged the agency's role in "debanking" crypto firms and vowed to change the FDIC's course to prevent future cases.

The House Committee on Oversight and Government Reform is also probing alleged cases of crypto firms being debanked. On Jan. 24, the Committee sent a formal letter to several entities related to crypto requesting evidence and accounts of such cases.

Powell's brief mention of crypto led to optimism in the market, causing many assets to rally after the day's slump. Bitcoin (BTC) fell 1.5% to $101,417.24 after the FOMC revealed no interest rate cuts this month, potentially postponing further cuts until June. However, during Powell's speech, especially after the mention of crypto, the BTC price rebounded 3.3% to touch $104,774.44.

Based on CryptoSlate data, the flagship crypto was trading at $103,740 as of press time.