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Federal Reserve Signals Openness to Cryptocurrency Services by US Banks

Jerome Powell’s Comments on Cryptocurrency and Banks

The Federal Reserve signaled on Wednesday that serving the cryptocurrency space shouldn’t be off-limits for US banks, whether that involves catering to customers or pioneering new services.

Fed Chair Jerome Powell said during a Wednesday press conference that the US central bank is “not against innovation” and that “banks are perfectly able to serve crypto customers, as long as they understand and can manage the risks.”

Banks Already Engaging with Cryptocurrency

“A good number of our banks that we regulate and supervise do that,” Powell continued. “The threshold has been a little higher for banks engaging in crypto activities.”

Operation Choke Point 2.0 and Debanking

Powell’s remarks came days after the House of Representatives officially began investigating a plot dubbed “Operation Choke Point 2.0.” His comments were made in response to a reporter asking whether speculation in an unregulated asset class could hurt American households.

Coinbase’s Chief Legal Officer’s Response

Coinbase’s Chief Legal Officer Paul Grewal told Decrypt in an email that Powell’s comments were refreshing.

“What a change from the last four years,” he said. “What I hear Jay Powell saying is: Banks are now free to manage any risks from crypto, just like they manage any risks from any other industry.”

Conclusion

In conclusion, Jerome Powell’s comments signal a shift in the Federal Reserve’s stance on cryptocurrency services by US banks. The comments suggest that banks are no longer limited in their ability to serve cryptocurrency customers, as long as they understand and can manage the risks involved.

FAQs

Q: What did Jerome Powell say about cryptocurrency and banks?
A: Powell said that banks are “perfectly able to serve crypto customers, as long as they understand and can manage the risks.”

Q: Will banks be allowed to engage in cryptocurrency activities?
A: Yes, Powell’s comments suggest that banks are now free to engage in cryptocurrency activities, as long as they manage the risks involved.

Q: Is the Federal Reserve open to innovation in the cryptocurrency space?
A: Yes, Powell said that the Federal Reserve is “not against innovation” and is open to new ideas and services in the cryptocurrency space.

Q: What is Operation Choke Point 2.0?
A: It is a plot that was recently investigated by the House of Representatives, which is suspected of being a government conspiracy to limit the use of cryptocurrency.

Q: What is debanking?
A: Debanking is the process of cutting off individuals and entities from the financial system due to their involvement in certain industries, such as cryptocurrency.