Fed Chair Powell Unleashes Banks: ’Go Forth and Conquer Crypto’

Wall Street's vault doors just swung wide open. In a move that sent shockwaves through both TradFi and DeFi circles, Federal Reserve Chair Jerome Powell greenlit full-scale crypto engagement for US banks—no training wheels, no apologies.

The bombshell: Banks can now dive headfirst into crypto custody, trading, and even issuance without fear of regulatory reprisal. Powell's stance? "Innovation shouldn't require permission slips."

Market impact: Bitcoin immediately ripped past $70K on the news, while banking stocks rallied. JPMorgan reportedly accelerated plans to tokenize gold—because nothing says 'modern finance' like digitizing a 5,000-year-old store of value.

The fine print: Powell emphasized "appropriate risk management" (translation: lose customer crypto and you're toast). The Fed will monitor exposures but won't play nanny.

Bottom line: The institutional floodgates are officially open. Crypto just got its biggest legitimacy boost since the Bitcoin ETF approvals—and traditional finance finally admitted the future won't be built on COBOL and T+2 settlement.

Back in February, Powell said that the Federal Reservefrom serving legal crypto customers. He proclaimed that the Fed would no longer get in the way of crypto banking and permitted banks to serve cryptocurrency customers. Now the Fed Chair is given a further green light for Banks to not only serve crypto customers but also conduct their own crypto activities, such as offering spot crypto ETFs.

In December 2024, Fed Chair Powell said the US central bank has no desire to be involved in any government effort to stockpile large amounts of crypto. “We’re not allowed to own Bitcoin,” he said. However, one of Donald Trump’s first executive orders involved founding a digital asset stockpile for the US government, one that will likely hold BTC. As more pro-crypto plans have been passed through the Federal Government and more may be on the way, the Federal Reserve is now becoming more lenient on allowing banks to engage in the growing digital assets industry. Several banks have already begun allowing their clients to engage in crypto products, from JPMorgan to Bank of America. That trend will likely grow thanks to Powell’s latest comments.

Federal Reserve Pending Big Decision That Could Pump Crypto Even More

Furthermore, the crypto industry is also waiting on a final decision by the Fed to execute or deny another interest rate cut to start 2025. While the central bank again kept interest rates the same in June, many still believe that 1-2 more cuts could come before the year is over. Another rate cut WOULD send bullish signals throughout crypto, sending prices higher and likely increasing investor optimism, which would likely be seen by crypto clients at US banks as well.

While the Fed is still doing its job of overseeing the bank’s activity, allowing individual decision-making in handling crypto is a step forward compared to previous years. It isn’t the first pro-crypto decision made by Powell this year, and possibly won’t be the last either, with several more questions surrounding crypto in banking and crypto regulation still up in the air.

The crypto market has responded well to the news. The overall cryptocurrency market cap is up 5% in the last 24 hours, while overall trading volume in the same period is also up 25.95%. Several big-name crypto tokens, including Bitcoin and Ethereum, are rising in value today, which will prompt meme coins and smaller altcoins to follow.