30th January 2025 – (Washington) Federal Reserve Chair Jerome Powell has affirmed that banks are well-equipped to serve the cryptocurrency sector, provided they adequately understand and manage the associated risks.

Speaking at a press conference on Wednesday following the Federal Open Market Committee meeting, Powell stated, “Banks are perfectly able to serve crypto customers as long as they can understand and service the risks.” He underscored the importance of ensuring that banking activities remain “safe and sound” for both institutions and their clients.

Powell’s comments signify a notable shift in tone from previous US regulatory stances during the Biden administration, reflecting a more open approach to the integration of cryptocurrency into the traditional banking system. His remarks spurred a 4% rally in Bitcoin, which climbed to $104,300 shortly after the announcement.

Addressing the contentious issue of “debanking,” Powell acknowledged ongoing concerns about banks denying services to crypto-related businesses. “We certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion,” he noted.

The debanking debate, which centres on whether banks are unfairly cutting off access to financial services for crypto clients, has drawn criticism from industry leaders, including venture capitalist Marc Andreessen. The controversy is set to take centre stage on Capitol Hill this year as policymakers grapple with balancing innovation and financial stability.