Powell acknowledges maturation of cryptocurrencies and signals review of Fed policies

• Fed revises stance on banks and cryptocurrencies
• Powell highlights maturation of crypto market
• 2023 stablecoin statement under review

During a hearing before the Senate Banking Committee on June 25, Federal Reserve Chairman Jerome Powell stated that the cryptocurrency market has matured and gained relevance. The statement came in response to Senator Cynthia Lummis, who questioned the Fed's 2023 policy on stablecoins.

Powell indicated that the institution is reassessing guidelines formulated in recent years, especially those issued under Section 9(13), which deals with activities permitted for member banks authorized by states.

The policy issued in January 2023 limited the participation of financial institutions in initiatives related to crypto assets and technologies such as decentralized public networks. According to the text at the time, the issuance of tokens on open networks presented risks incompatible with banking practices considered safe.

However, Powell now acknowledges changes in the industry: “The industry is maturing, our understanding of it is improving. And in some ways it is becoming much more mainstream.”

The speech reinforces the possibility of adjustments to previous standards, drawn up at a time when the sector was still in its early stages of development. “We are all revisiting the things that were done at that time,” he said.

The Fed chairman also signaled that banks should be free to engage with crypto clients as long as they meet security requirements. “It is appropriate, it has always been appropriate for banks to choose their clients and be able to engage in activities as long as they are safe and secure,” he said.

He further explained that the Section 9(13) policy is part of a broader regulatory framework that is not limited to the crypto sector, although it includes it as one of its areas of focus.

The Federal Reserve is currently reviewing several guidelines adopted during the Biden administration, which could pave the way for greater integration between traditional financial institutions and the cryptocurrency market.