Powell Opens Door for Banks to Serve Crypto Customers

Fed Chair Jerome Powell has signaled a shift in the central bank's stance towards cryptocurrency, indicating that banks are now able to serve crypto customers as long as they can manage the associated risks. Powell made these remarks during a press conference on Wednesday, marking a potential turnaround from the so-called 'Operation Choke Point 2.0' (OCP 2.0), which had been restricting banking access for crypto firms.

Powell clarified that banks can serve crypto customers, stating, "Banks are perfectly able to serve crypto customers as long as they understand and can manage the risks [...] we’re not against innovation." He further emphasized that the Fed does not want banks to terminate legal customers due to excessive risk aversion related to regulation and supervision.

Nic Carter, co-founder of Castle Island Ventures and a prominent figure who has covered OCP 2.0, believes that Powell's statement signals the end of the restriction. Carter noted an "immense tonal shift" and stated that OCP 2.0 is over, particularly since the Fed was previously seen as the driving force behind the de-banking in the sector.

In a recent interview, Marc Andreessen, co-founder of a16z, claimed that 30 tech founders had been de-banked over the past four years. James Comer, the Chairman of the House Committee on Oversight and Government Reform, is currently investigating the matter. Powell's statement has been welcomed by the tech startup ecosystem, including crypto, as it relieves some of the previously faced challenges.

Paul Grewal, Coinbase's Chief Legal Officer, also praised Powell's statement, describing it as a "change" from the previous administration. Grewal noted that banks are now free to manage risks from crypto, just like they would with any other industry.

In addition to Powell's statement, the SEC's recent rescission of the accounting guidance SAB 121, which restricted the inclusion of crypto assets in firms' financial statements, further signals a more welcoming regulatory environment for cryptocurrency.