Jerome Powell dedicated a section of his exposure to the cryptocurrency sector and questioned the decision of banks to close accounts or restrict services to companies and linked people.
He President of the United States Federal Reserve (FED), Jerome Powell, He expressed to the Senate Banking Commission concern about the growing “Disconcarization” that affects the cryptocurrency industry And he assured that, while he remains at the head of the institution, A Central Bank digital currency (CBDC) will not be issued.
Impact of dismissal in the crypto industry
The term “dismissal” in the context of cryptocurrencies refers to Decision of traditional banks and financial entities to close accounts or restrict services to companies and people linked to the sector. This limits the operational capacity of crypto companies, which depend on access to banking services to process deposits, withdrawals and convert digital assets into fiduciary money. As a consequence, The use of decentralized alternatives, such as stablecoins, is encouraged Or the search for banks most open to the industry, which slows the institutional adoption of cryptocurrencies.
“I am concerned about these reports,” Powell admitted, noting that the phenomenon could be due to the reluctance of banks to assume risks due to strict regulations against money laundering and regulators’ pressure. “We are committed to reviewing this situation from a new perspective,” added.
In this regard, Powell stressed that the disappearance of allied banks of the crypto sector, such as Silvergate Bank and Signature Bank in 2023, significantly reduced bank options for these companies.
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Position on regulations and digital currency of the Central Bank
Republican legislators and new financial regulators appointed by President Donald Trump criticized the dismissal, arguing that it was promoted by government agencies during the previous administration, including the Fed, the Federal Corporation of Deposit Insurance (FDIC) and the Office of the Comptroller of the Comptroller of The currency (Occ).
On the other hand, Powell supported regulatory advances around Stablecoinshighlighting its potential for consumers and companies. “Its development must be carried out safely and with an adequate regulatory framework that protects users,” he said.
As for CBDCS, Powell was categorical in stating that he will not boost the issuance of a digital dollar while leading the Fed. He responded with a resounding “yes” when asked if he ruled out the possibility of launching a CBDC under his leadership. In a previous audience, he had already indicated that the United States was “far from recommending or adopting” a digital currency of the Central Bank.
It is worth mentioning that President Trump issued an executive order on January 23 prohibiting the creation and circulation of a Digital dollaralthough his authority to do so has been questioned by legal experts. In addition, in May 2024, the House of Representatives approved a bill against CBDCS, currently under review by the Senate Banking Commission.
Source: Ambito
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