Fed Chair Jerome Powell said today that the Federal Reserve will not block banks from serving legal crypto customers. The chair says that the Fed doesn’t plan to get in the way of crypto banking, and is in fact granting banks permission to serve cryptocurrency customers.

Powell returned to Capitol Hill on Wednesday for the second day of his semiannual updates on monetary policy. The central bank leader has already answered multiple questions about cryptocurrency thus far, changing his tune to supporting the market and not disabling it. Two weeks earlier at the FOMC meeting, Powell said that “banks are perfectly able to serve crypto customers.” His latest remarks double down on that notion, indicating support for the continued development of crypto in the US banking system.

Fed Chair Jerome Powell Doubles Down: Banks Can Serve Crypto Customers

In December 2024, Jerome Powell said the US central bank has no desire to be involved in any government effort to stockpile large amounts of crypto. “We’re not allowed to own Bitcoin,” he said. However, one of Donald Trump’s first executive orders involved founding a digital asset stockpile for the US government, one that will likely hold BTC. Now, the Central Bank Chair is a lot more mindful of Fed-regulated banks organizing crypto activity.

“Banks are perfectly able to serve crypto customers, as long as they understand and can manage the risks,” Powell said in late January. “If you’re making a choice to conduct that activity inside a bank, which is inside the federal safety net with deposit insurance, then you want to be pretty sure that that is a safe and sound activity.”

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The crypto industry is also waiting on a final decision by the Fed to execute or deny another interest rate cut to start 2025. The Fed decided for the first time in years to cut interest rates on multiple occasions in 2024. As the US continues to battle inflation, rate cuts are seen as signs of the US winning that battle. Fed Chair Powell has already indicated that the Fed is not in a rush to cut interest rates. However, it was reported today that inflation rose 3%.

The Fed’s decision to allow banks to serve crypto customers and undertake crypto activity is a positive development for the crypto industry. While the Fed is still doing its job of overseeing the bank’s activity, allowing individual decision-making in handling crypto is a step forward compared to previous years.