Federal Reserve Chair Jerome Powell gave a much-appreciated nod of approval for the cryptocurrency industry during his congressional testimony this week, declaring that Bitcoin and digital assets have “matured” and become “much more mainstream.”
Speaking before the Senate Banking Committee on June 25, Powell’s comments marked a dramatic shift from the regulatory hostility that characterized the Biden era, signaling a new chapter of acceptance for crypto within the traditional financial system.
His remarks sent Bitcoin surging 1.38% to $108,000 as markets interpreted the Fed chief’s words as validation of crypto’s legitimacy and permanence in the financial landscape.
The testimony came in response to pointed questioning from Senator Cynthia Lummis, Wyoming’s pro-crypto Republican who challenged Powell on the Fed’s previous restrictive policies.
Powell acknowledged that regulators are “revisiting the things that were done during that era,” referring to guidance issued during crypto’s tumultuous early development phase when high-profile failures and fraud dominated headlines.
Fed Greenlights Crypto Revolution
The Federal Reserve has taken concrete steps to dismantle the barriers that previously restricted crypto companies’ access to traditional banking services. Most significantly, the Fed formally removed “reputational risk” from its bank supervision framework on June 23, eliminating a subjective standard that examiners had used to deny banking services to crypto firms.
Powell emphasized that banks should maintain the freedom to choose their customers and business models, stating it has “always been appropriate for banks to choose their customers and to be able to undertake activities as long as they’re safe and sound.”
This principle extends to crypto-related activities, provided institutions maintain proper risk management and consumer protection standards. The Fed chair’s position represents a clear departure from the “Operation Choke Point 2.0” allegations that plagued the previous administration, where crypto companies claimed systematic exclusion from banking services.
Regulatory Clarity Emerges
Powell’s supportive stance coincides with meaningful legislative progress on Capitol Hill, where he praised congressional efforts to establish comprehensive crypto frameworks. “It’s a great thing that bills are moving,” Powell declared, specifically highlighting the need for stablecoin regulation.
The Senate recently passed the GENIUS Act with bipartisan support, establishing frameworks for stablecoin issuance and trading, while the House considers the CLARITY Act for broader crypto market structure.
This legislative momentum, combined with the Fed’s regulatory evolution, suggests that 2025 could mark a turning point for crypto’s integration into mainstream finance. Powell’s acknowledgment that the industry is “becoming much more mainstream” reflects broader institutional acceptance that has been building since the approval of Bitcoin ETFs and growing corporate adoption.
However, challenges remain, as Powell appeared non-committal when pressed about removing specific anti-crypto language from Section 9(13) of the Federal Reserve Act, telling Senator Lummis he would “get back to her” on potential revisions.
The coordinated policy shifts across federal banking regulators signal a new era of “responsible innovation” in digital assets, with banks expected to expand offerings from basic accounts to crypto custody and settlement services under proper oversight frameworks.
