Federal Reserve Chair Jerome Powell has made a bold statement, calling for a “fresh look” at debanking concerns amid growing criticism that crypto firms are being denied access to banking services.
His remarks come as lawmakers increase pressure on regulators to address the issue.
Powell commits to tackling crypto debanking
During a Senate Banking Committee hearing, Chair Tim Scott questioned Powell on whether he would work to ensure that financial regulations are fair and don’t create unnecessary hurdles.
Powell responded by agreeing to collaborate, emphasizing that the Federal Reserve does not intend to make things harder for crypto firms but acknowledged that regulations sometimes lead to unintended consequences.
He noted being “struck” by the increasing number of Bitcoin and crypto companies struggling to maintain banking access and agreed to work with lawmakers to find solutions.
The debate over crypto debanking is heating up in Washington, with lawmakers launching hearings and investigations into the matter.
Just last week, both the House and Senate held discussions on the issue.
Crypto companies have long faced difficulties in securing and maintaining bank accounts, with Coinbase even suing the Federal Deposit Insurance Corporation (FDIC) last year, alleging efforts to block the industry from accessing banking services.
Powell has previously stated that banks are allowed to serve crypto clients, provided they properly manage associated risks.
Federal Reserve takes a cautious approach to rate cuts
While addressing monetary policy, Powell also stressed that the Federal Reserve is “in no hurry” to cut interest rates, despite mounting pressure from Donald Trump to ease borrowing costs.
He pointed out that with the economy remaining strong and the Fed’s policy stance already less restrictive than before, there is no urgent need for adjustments.
His comments follow the Fed’s recent decision to keep the federal funds target range at 4.25-4.5%, maintaining stability after three consecutive rate cuts that collectively lowered the rate by 1 percentage point.
Market analysts predict that interest rates will likely remain steady until May or June this year.
No plans for a central bank digital currency
Powell also made it clear that under his leadership, the Federal Reserve will not move forward with the creation of a central bank digital currency (CBDC).
His stance aligns with previous remarks cautioning against the potential risks of a government-controlled digital asset.
This statement reassures critics who have raised concerns about financial privacy and government overreach in the digital currency space.
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