Fed’s Powell Acknowledges Crypto ‘Debanking’ Concerns, Pledges Review

Federal Reserve Chairman Jerome Powell addressed concerns over the growing “debanking” trend in the crypto industry during his testimony before the Senate Banking Committee. Powell admitted he is troubled by the increasing reports of banks severing ties with crypto firms and noted that the Fed is already adjusting internal supervision policies. He suggested banks may be overly cautious due to stringent anti-money laundering regulations and aggressive oversight.

"We’re determined to take a fresh look at that," Powell said, acknowledging the issue’s significance. He also confirmed that the Fed is removing a policy that directed heightened scrutiny on bankers engaged in controversial activities, a concern raised by crypto advocate Senator Cynthia Lummis.

The discussion briefly touched on stablecoins and central bank digital currencies (CBDCs). Powell expressed support for regulatory efforts on stablecoins, stating they "may have a big future with consumers and businesses," but emphasized the need for a strong regulatory framework. On CBDCs, Powell provided a decisive answer, agreeing to never launch a U.S. digital dollar, a stance reinforced by opposition from lawmakers.

While crypto policy wasn't the hearing’s main focus, market conditions and monetary policy were also discussed. Powell maintained that the economy is in a solid position but stressed the importance of controlling inflation before any further rate cuts. The Fed had previously slashed rates by 100 basis points in late 2024 but halted further easing in December.

Following Powell’s remarks, Bitcoin (BTC) dipped 2.35% to $95,140, reflecting ongoing market uncertainty. Powell is set to testify before the U.S. House of Representatives next, with crypto policy expected to be a key topic at an upcoming House Financial Services Committee hearing.