Powell Stands Firm on Rates, Backs Stablecoin Regulations, Vows to Fight Crypto Debanking

Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee, outlining the central bank's stance on interest rates, stablecoin regulations, and anti-crypto debanking efforts. Powell maintained a cautious approach to monetary policy, expressing no urgency in cutting interest rates despite pressure from President Trump over inflation concerns.

Powell reaffirmed the Fed's commitment to a gradual pace of interest rate adjustments, stating that aggressive cuts are unnecessary. While a 50 basis-point rate cut last year boosted the crypto market, Powell has since slowed the pace of reductions. He acknowledged that some investors hope for larger cuts to encourage capital inflows, but warned that drastic reductions could create uncertainty and push investors toward safer assets. His decision to maintain the status quo may lead institutional investors to wait for clearer policy signals before making significant moves into crypto. This sentiment was reflected in the first weekly net outflow of 2025 for Bitcoin ETFs.

Beyond interest rates, Powell addressed the need for clear regulations around stablecoins. He emphasized their potential for both consumers and businesses but stressed the importance of a strong regulatory framework to ensure financial stability and consumer protection. The European Union recently adopted stablecoin regulations, increasing pressure on U.S. lawmakers to do the same. Powell fully supports these efforts, stating that stablecoins should develop within a regulated environment that safeguards users.

Additionally, Powell took a stand against ongoing efforts to limit crypto banking access. He acknowledged growing concerns about "debanking" and pledged to examine the issue more closely. Congress is currently investigating Operation Choke Point 2.0, and the FDIC has released a large collection of documents related to the matter. Powell appears convinced by the findings and has committed to using his influence at the Fed to prevent further restrictions on crypto-related banking services.

Powell's statements suggest a more measured approach to monetary policy and a willingness to support clearer crypto regulations. His stance could shape the financial landscape in the coming months, influencing both investor sentiment and the broader regulatory environment for digital assets.