Key Points:
- Federal Reserve Chairman Jerome Powell committed during a Senate hearing to addressing the issue of debanking in legitimate business sectors, including digital assets.
- Powell suggested that crypto stablecoins may have a promising future and supports regulatory efforts for them.
- The Fed chair affirmed that the U.S. financial system will not adopt a central bank digital currency (CBDC) during his tenure.
When addressing concerns from the Senate Banking Committee regarding the debanking trend impacting the crypto industry, Powell acknowledged his own worries and indicated potential adjustments in internal policies at the Fed.
“I too, am troubled by the quantity of these reports,” Powell stated during his routine testimony. He noted that banks appear risk-averse regarding money-laundering regulations, which may deter them from serving certain customers.
Powell expressed determination to reevaluate this situation, stating he is alarmed by the growing number of reported cases of debanking.
Republican lawmakers and financial overseers appointed by President Donald Trump are scrutinizing the debanking issue, which they believe was exacerbated by the former administration’s banking policies.
Powell also thanked Senator Cynthia Lummis for raising the Fed’s previous policy that directed extra scrutiny on bankers engaging in controversial speech. This policy is set to be removed from internal manuals.
Additionally, while not the main subject of the hearing, discussions included stablecoins and CBDCs.
“Stablecoins may have a big future with consumers and businesses,” Powell remarked. He stressed the necessity for a regulatory framework ensuring their safe development.
In addressing the prospect of developing a CBDC in the U.S., Powell simply replied, “yes,” when asked if he would agree to an indefinite delay on such a project.
The possibility of advancing U.S. experiments with CBDCs, akin to developments in China and Europe, has diminished significantly since the Trump administration’s resistance.
Powell is scheduled to speak again on this matter in the House of Representatives on Wednesday, with crypto slated to be a key topic in the upcoming hearing.
