Bitcoin jumps as Fed Chair Powell says banks ‘perfectly able’ to serve crypto clients

Federal Reserve Chair Jerome Powell opened the door for banks to start serving the crypto industry — as long as they properly mitigate risks.

“Banks are perfectly able to serve crypto customers as long as they can understand and service the risks,” Powell said at a press conference on Wednesday after the Federal Open Market Committee meeting.

Powell emphasised that if banks want to operate within the Fed’s purview, then clients “have to be pretty sure” their activities are “safe and sound.”

The Fed chair’s words mark a swift shift in sentiment from US policymakers compared with Joe Biden’s administration.

Bitcoin rallied 4% to $104,300 after Powell’s comments.

Debanking controversy

Powell also hinted at a controversy that had crypto in the crosshairs: “debanking.”

“We certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion,” he said.

This comes weeks after venture capital giant Marc Andreesen slammed banks for denying crypto clients access to financial services.

Was it debanking or derisking? The debate is heading to Capitol Hill this year.

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.