Fed Chair Powell Advocates For Stablecoin Regulation, Signals Openness to Crypto Innovation

Powell noted that earlier efforts to collaborate with Congress on a legal structure for stablecoins were unsuccessful. Still, he observed that “the climate is changing,” with lawmakers now showing renewed interest in formalizing regulation.  He emphasized that such a framework should include consumer protections and ensure transparency and added that “stablecoins are a digital product that could actually have fairly wide appeal.” 

Powell also addressed the Federal Reserve’s stance on crypto-related banking activity. He acknowledged that US bank regulators, including the Fed, had taken a conservative approach in issuing guidance on how banks should manage exposure to digital assets. However, he stated that some of this guidance may be relaxed to accommodate responsible innovation, provided consumer protections and financial safety remain intact. He said: “We’ll try to do it in a way that preserves safety and soundness.”

The remarks build on Powell’s previous statements that the Fed is not seeking to prevent banks from serving lawful crypto clients. In testimony to Congress earlier this year, Powell clarified that crypto activities are already occurring within Fed-regulated banks under established supervisory frameworks.  He cited crypto custody as an example of such services that banks can conduct safely if they and the regulators understand the activities’ scope.

Powell also acknowledged the regulatory complexity surrounding digital asset integration into traditional finance, calling for a more comprehensive oversight structure. Crypto and banking. During a press conference following the Federal Open Market Committee (FOMC) meeting in February, Powell said that while the bar remains high for banks to engage with crypto, the Fed does not intend to cut off access to banking for legally operating digital asset firms.

The ongoing discussion around stablecoin legislation comes amid continued growth in their usage for payments and digital settlement. Last year, stablecoins registered nearly $14 trillion in transfer volume, surpassing Visa. Powell’s statement positions the Federal Reserve as supportive of congressional efforts to create formal rules for stablecoins, provided such legislation balances innovation with risk containment.

There is no federal regulatory regime specifically governing stablecoins, though multiple legislative proposals have circulated in recent congressional sessions. The most notable are the GENIUS Act and the STABLE Act, proposed by the House of Representatives and the Congress, respectively. The Fed’s latest position indicates growing readiness among US financial authorities to engage with digital asset policy, especially as stablecoins increasingly integrate into global financial markets.