Federal Reserve Chair Jerome Powell stated on Tuesday that regulatory policies surrounding banking access should be reassessed, following concerns that the crypto industry is being unfairly excluded from financial services. Powell made the remarks during a Senate Banking Committee hearing, emphasizing the need to re-evaluate the unintended consequences of banking regulations. During the hearing, Committee Chair Tim Scott pressed Powell on whether he would collaborate with lawmakers to ensure financial regulations do not impose unnecessary burdens on businesses.
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Powell affirmed his commitment, stating, “I will commit to working with you on that, we do try to avoid excessive burden.” He added that a “fresh look” at debanking practices was warranted, acknowledging that while regulatory measures are not intended to exclude specific industries, they can have that effect. Debanking concerns have gained renewed attention in Washington, with lawmakers conducting hearings and investigations into the issue.
The House and Senate each held hearings last week focusing on reports that crypto firms face increasing difficulties in securing and maintaining banking relationships in the U.S. Some industry representatives have argued that regulatory pressure is effectively cutting off their access to essential financial services. Leading crypto exchange Coinbase escalated the issue last year by filing a lawsuit against the Federal Deposit Insurance Corporation (FDIC) through consulting firm History Associates.
The lawsuit alleges that the FDIC has actively worked to isolate the crypto industry from the banking sector. Meanwhile, major U.S. bank executives have also voiced concerns over the complexities of integrating cryptocurrency-related services within their institutions. Later in the Senate hearing, Powell acknowledged the increasing prevalence of debanking, remarking that both he and his colleagues had noticed a growing number of cases where firms appeared to be systematically excluded from financial services. “We’re determined to take a fresh look at that,” he stated.
Powell’s stance aligns with his earlier comments on crypto banking regulations. In a press conference last month, he noted that while banks are allowed to serve crypto-related businesses, they must demonstrate the ability to manage associated risks effectively. He also highlighted that the regulatory threshold for banks engaging in crypto activities has been set higher due to the emerging nature of digital assets. The ongoing scrutiny of crypto debanking reflects broader regulatory debates on balancing financial stability with innovation. As discussions continue in Congress, industry stakeholders await potential policy adjustments that could impact banking access for crypto businesses in the U.S. – By CryptoWire News Desk.