Federal Reserve Chair Jerome Powell delivered remarks yesterday suggesting that US banks can freely engage with crypto clients—provided they understand and manage the inherent risks. Powell’s comments came during the Federal Open Market Committee (FOMC) press conference, where he addressed queries about the Fed’s stance on crypto banking.
“Banks are perfectly able to serve crypto customers as long as they understand and can manage the risks,” Powell said. “We’re not against innovation, and we certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because excess risk aversion may be related to regulation and supervision.”
Positive Reactions From Crypto Industry
Within hours, key figures in the community offered widespread praise for Powell’s statement, interpreting it as a green light for banks that have been hesitant to embrace crypto services. Nic Carter, a partner at Castle Island Ventures and co-founder of blockchain data aggregator Coinmetrics.io, commented via X, “Immense tonal shift. OCP2.0 over. this is particularly notable because my understanding is the Fed specifically was the nexus of OCP2.0.”
This sentiment was echoed by Hunter Horsley, CEO of Bitwise Asset Management, who tweeted, “Banks will be a major catalyst for crypto in 2025. Mainstream era beginning.” Meanwhile, David Lawant, head of research at FalconX, remarked, “Massive wave incoming over next 6-18 months. Most aren’t aware of the scale of it.”
Joe Consorti, head of growth at They, underscored the potential breadth of bank offerings: “Banks can custody bitcoin on behalf of clients, create structured bitcoin financial products, and allow customers to buy bitcoin. Even Powell isn’t badmouthing it anymore. Vibe shift.” Bitcoin analyst Dylan LeClair also signaled the convergence of regulatory and market forces, stating, “FASB + repeal of SAB 121 + In-Kind redemptions for ETFs. Banks are here.”
Powell’s comments arrive at a moment when several regulatory and accounting changes are poised to reshape how banks handle digital assets. In August 2024, the Financial Accounting Standards Board (FASB) introduced a standardized framework for accounting cryptocurrencies on company balance sheets. This was a landmark step, as it establishes clarity on reporting practices—a crucial component for banks considering offering crypto services.
The Securities and Exchange Commission (SEC) had previously imposed Staff Accounting Bulletin (SAB) 121 in March 2022, requiring financial firms to record customer-held cryptocurrencies as liabilities on their balance sheets. On January 23, 2025, the SEC repealed this rule through SAB 122. This move simplifies the custody process for digital assets, removing a substantial reporting burden and paving the way for more financial institutions to engage in crypto.
Moreover, in-kind redemptions for exchange-traded funds (ETFs), especially Bitcoin ETFs, are set to become a reality under the Trump administration. Instead of using cash, this mechanism allows ETF shares to be exchanged for the underlying assets—aligning smoothly with Bitcoin’s decentralized nature and offering potential tax benefits. BlackRock recently applied for a rule change at the SEC for its spot Bitcoin ETF.
Taken together, these regulatory evolutions—coupled with Powell’s supportive tone—signal a turning point for banks considering entry into crypto markets. Industry observers suggest that, with obstacles like SAB 121 removed and transparent FASB rules in place, US banks could become leading participants in the next wave of crypto adoption.
At press time, the total crypto market cap stood at $3.49 trillion.
Featured image created with DALL.E, chart from TradingView.com
