"Powell Urges Congress for Crypto Regulation, Fed Clarifies Bank Stance"
1min read Federal Reserve Chair Jerome Powell has called on Congress to establish a comprehensive regulatory framework for the cryptocurrency industry, emphasizing the potential benefits of clear guidelines for both investors and institutions. Powell's remarks, made during a recent press conference, indicate a shift towards a more structured approach to cryptocurrency regulation, suggesting that a larger regulatory framework could foster a safer environment for the sector.
Powell's comments come amid ongoing discussions in Washington about how to balance innovation in digital currencies while ensuring consumer protection. The call for Congress to consider a larger regulatory framework underscores the necessity for coherent policy that can adapt to the rapid evolution of the crypto market. As the industry matures, regulatory clarity could play a crucial role in its stability and growth.
In addition to Powell's remarks, the Federal Reserve has clarified its stance on banks serving crypto clients, stating that they can do so as long as they effectively manage the associated risks. This clarification comes amid concerns of crypto debanking and industry crises like the FTX collapse. Powell highlighted the need for a higher threshold of risk management for banks engaging in crypto activities due to their novelty, asserting that the central bank supports innovation.
Meanwhile, legislative and legal actions are being taken to address the ongoing debate around banks' services to crypto firms. US Commerce Secretary nominee Howard Lutnick was questioned during a Senate Commerce Committee hearing about his firm Cantor Fitzgerald's custodial role for Tether amidst scrutiny over the crypto token's reserves and alleged ties to illicit finance. Lutnick defended the stability of USDT and its backing, while addressing ongoing regulatory challenges and fines related to the token.
In other news, Czech National Bank Governor Aleš Michl plans to propose a strategy to allocate up to 5% of the bank's €140 billion reserves to Bitcoin. This initiative, aimed at diversifying the CNB's reserve assets, could position the CNB as the first central bank to hold Bitcoin. Michl cited the asset's potential for high returns despite its volatility and the increasing interest from major asset managers and regulatory developments in the US.
Gary Gensler, the former chair of the US Securities and Exchange Commission (SEC), has returned to the MIT Sloan School of Management as Professor of the Practice. He will focus his teaching and research on artificial intelligence, finance, financial technology, and public policy. In addition to his academic role, Gensler will co-direct the FinTechAI@CSAIL initiative, partnering 
