- Jerome Powell supports banks serving crypto customers under proper guidance.
- Industry insiders see this as a positive shift from the previous administration’s stance.
Federal Reserve Chair Jerome Powell has indicated a change in approach regarding the banking of crypto-related businesses, moving away from the controversial de-banking practices associated with the Biden administration.
Referred to as ‘Operation ChokePoint 2.0 (OCP 2.0),’ the widespread banking restrictions imposed on crypto firms caught the attention of the new Trump administration, prompting an official investigation.
During a recent press conference, Powell clarified that banks can now provide services to crypto customers while managing associated risks effectively. He emphasized,
“Banks can serve crypto customers as long as they can understand and mitigate risks. We support innovation.”
He further stated,
“We want to avoid actions that could lead banks to terminate legally compliant customers due to excessive risk aversion related to regulations.”
A positive development for crypto enthusiasts?
Nic Carter, co-founder at Castle Island Ventures and a vocal critic of OCP 2.0, had previously attributed the de-banking trend to the Fed. However, Powell’s recent statement has led him to believe that the restrictions may now be lifted. He remarked,
“Significant change in tone. OCP 2.0 seems to have ended. This is noteworthy as the Fed was reportedly central to OCP 2.0.”
In a recent interview on the ‘Joe Reagan Experience,’ a16z co-founder Marc Andreessen disclosed that 30 tech founders had been de-banked in the past four years.
James Comer, Chairman of the House Committee on Oversight and Government Reform, is currently investigating this issue, bringing relief to the tech startup ecosystem, including the crypto sector.
Coinbase’s Chief Legal Officer, Paul Grewal, described Powell’s statement as a significant departure from the previous administration’s policies. He commented,
“Powell’s message indicates that banks can now manage crypto risks just like any other industry. This marks a stark change from the past four years.”
Additionally, the SEC recently revoked the controversial accounting guidance SAB 121, which restricted the reporting of crypto assets in financial statements.
These positive developments are expected to encourage greater adoption of crypto technologies in the United States.