Federal Reserve Chair Jerome Powell confirmed that U.S. banks may now offer cryptocurrency services, provided they implement appropriate risk controls. The announcement, made during congressional testimony on June 24–25, marks a pivotal regulatory shift that signals increasing mainstream acceptance of crypto assets. The move follows prolonged discussions among lawmakers and regulators, who have sought clarity on how banks can engage with the crypto industry without compromising financial stability [2].

The market responded swiftly to Powell’s remarks, with Bitcoin surging over 5.7% in a short period and breaking above $105,000. The surge was accompanied by inflows into Bitcoin spot ETFs and heightened investor interest in Ethereum, reflecting broader institutional confidence in digital assets [1]. Powell emphasized that banks have the authority to engage with crypto firms as long as they adhere to sound risk management practices. His testimony indicated a more mature understanding of the crypto industry, with several senators, including Cynthia Lummis, probing the Fed’s evolving stance during hearings [2].

This regulatory flexibility is outlined in Letter 1183, which allows national banks and federal savings associations to own digital assets and participate in stablecoin activities. The shift aligns with broader efforts to position the U.S. as a global leader in digital finance. A recent report from the President’s Working Group on Digital Asset Markets called for policy actions to enhance U.S. competitiveness in the crypto space, reinforcing the importance of regulatory clarity [3].

The Office of the Comptroller of the Currency is set to issue final rules on July 15, 2025, enabling banks to offer crypto custody services. These rules are part of “Project Crypto,” an initiative aimed at rewriting the regulatory framework for digital assets. Meanwhile, proposed legislation like the GENIUS Act introduces exceptions that could allow U.S. digital asset service providers to engage with foreign stablecoin issuers under certain conditions, further signaling the government’s support for innovation in the sector [7].

Critics, however, remain cautious. Trade groups such as the American Bankers Association have raised concerns about potential systemic risks and the adequacy of safeguards for crypto-backed financial institutions [8]. These concerns highlight the need for robust regulatory guardrails as the market evolves.

The regulatory shift has already drawn interest from crypto firms seeking to integrate into the traditional financial system. Ripple Labs, for instance, has submitted a formal application for a national trust bank charter. The proposed institution would focus on stablecoin operations and fiduciary services, primarily supporting business-to-business transactions rather than retail customers [1]. If approved, Ripple’s charter could set a precedent for other crypto firms pursuing similar regulatory pathways and validate the sector’s integration into mainstream finance [6].

From a market perspective, the Federal Reserve’s stance could attract institutional investors and foster innovation in digital finance. Ripple’s application for a Federal Reserve Master account, which would enable direct settlement of stablecoin transactions, illustrates the potential for seamless integration with traditional financial infrastructure [6]. The outcome of this and similar applications may shape the future landscape of crypto banking in the U.S., influencing how banks, fintechs, and crypto platforms collaborate.

The U.S. Treasury has also shown increasing interest in blockchain, exploring its potential for payments and decentralized computing. This aligns with the broader institutional trend of recognizing digital assets as a legitimate part of the financial ecosystem [4]. However, the path forward will require balancing innovation with stability, ensuring that regulatory frameworks evolve at a pace that supports growth without exposing the system to undue risk.

Source:

[1] Ripple’s Banking License Update: Here’s Latest … (https://u.today/ripples-banking-license-update-heres-latest-development)

[2] Compliance to Catalyst: Regulatory Shift for Digital … (https://www.forvismazars.us/forsights/2025/08/compliance-to-catalyst-regulatory-shift-for-digital-banking-growth)

[3] BPInsights: August 1, 2025 (https://bpi.com/bpinsights-august-1-2025/)

[4] U.S. Treasury is exploring blockchain for payments and … (https://www.mitrade.com/insights/news/live-news/article-3-1006368-20250802)

[6] Is an XRP Pullback on the Horizon? Here’s What Investors … (https://www.aol.com/xrp-pullback-horizon-heres-investors-101000954.html)

[7] GENIUS Act Establishes Regulatory Framework For … (https://www.mondaq.com/unitedstates/fin-tech/1660328/genius-act-establishes-regulatory-framework-for-stablecoins)

[8] Banking Regulations & Policy News (https://www.bankingdive.com/topic/regulations-policy/)