Catenaa, Thursday, January 30, 2025 – Federal Reserve Chair Jerome Powell said Wednesday that banks are allowed to serve cryptocurrency firms as long as they can properly manage associated risks, addressing concerns that the industry is being cut off from traditional financial institutions.
“The threshold has been a little higher for banks engaging in crypto activities, and that’s because they’re so new,” Powell said during a press conference, adding that the Fed is not against innovation.
Crypto companies have long struggled to secure banking relationships, particularly after the 2022 collapse of FTX, which led regulators to issue warnings about “crypto-asset risks.” In 2023, venture capitalist Nic Carter coined the term “Operation Choke Point 2.0,” alleging that federal agencies were deliberately restricting crypto firms’ access to banking services, similar to an Obama-era initiative targeting high-risk financial sectors.
The issue has drawn scrutiny in Congress, where the House Financial Services and Oversight Committees have launched investigations into alleged debanking of crypto firms. House Financial Services Chair French Hill vowed to take a “strong position” on the matter.
Meanwhile, major bank executives have expressed concerns about regulatory uncertainty. JPMorgan Chase CEO Jamie Dimon said his bank works with a limited number of crypto firms but faces risks of substantial fines if compliance issues arise.
Powell suggested that clearer legislation could resolve the issue, noting that Congress has been working on crypto regulations, though no bills have yet passed into law.
