Federal Reserve Chair Jerome Powell has signaled that it may be time to reassess banking regulations amid growing concerns that the cryptocurrency sector is being unfairly excluded from financial services.
Powell's comments came at a hearing today of the Senate Banking Committee.
During the hearing, Committee Chairman Tim Scott asked Powell whether financial regulations create undue burdens on businesses and whether lawmakers would commit to working together to address potential overreach.
“I am committed to working with you on this, trying to avoid overreach,” Powell responded. “Frankly, I think it would be fair to take a fresh look at debanking.”
Powell acknowledged that regulatory measures are not intended to isolate industries, but sometimes unintended consequences occur. “We don’t do these things intentionally, but sometimes regulations cause things to happen and we have to work on that,” he added.
Scott also pressed Powell on whether she would work with lawmakers to end debanking, and Powell reaffirmed her commitment to that.
The issue of crypto-related debanking has returned to the agenda in Washington, where lawmakers have held numerous hearings and investigations into the matter. Both the House and Senate recently held hearings focused on how crypto firms are being affected by banking restrictions.
Last year, Coinbase escalated the matter by filing a lawsuit against the Federal Deposit Insurance Corporation (FDIC) through its consulting firm History Associates, alleging that the agency was intentionally cutting off the crypto industry from financial services.
Powell has previously stated that banks are allowed to serve crypto clients as long as they effectively manage the risks involved.
*This is not investment advice.
