The post Federal Reserve says US banks should serve crypto without fear of penalties appeared on BitcoinEthereumNews.com. Federal Reserve Vice Chair for Supervision Michelle Bowman acknowledged that crypto firms experienced debanking due to regulatory uncertainty. During the Wyoming Blockchain Symposium on Aug. 19, Bowman also announced a fundamental shift in the Fed’s approach to blockchain innovation. She revealed the central bank eliminated reputational risk considerations from bank supervision in late June to address barriers preventing financial institutions from serving digital asset companies engaged in legal activities. The Fed official stated: “Your industry [crypto] has already experienced significant frictions with bank regulators applying unclear standards, conflicting guidance, and inconsistent regulatory interpretations.” Bowman emphasized that banks should not face penalties for serving customers conducting lawful business operations, stating that customer selection decisions “lie solely within the purview of bank management” rather than regulatory interference. Furthermore, she noted the Fed’s transition from an “overly cautious mindset” toward embracing blockchain technology within the traditional banking system. She warned that regulators must choose between shaping technological frameworks or allowing innovations to bypass banks entirely, potentially diminishing the banking sector’s economic relevance. The Fed is updating examination manuals and supervisory materials to ensure lasting implementation of the reputational risk removal policy. Four-principle regulatory framework The Fed Vice Chair established four core principles guiding the central bank’s new approach to digital asset regulation. Regulatory certainty tops the list, addressing industry concerns about investing in blockchain development without clear supervisory standards. Bowman questioned whether companies would partner with banks, knowing that regulatory scrutiny brings uncertainty, rather than pursuing alternatives outside the banking system. Tailored regulation forms the second principle, requiring supervisors to evaluate use cases based on specific circumstances rather than applying worst-case scenario expectations. The Fed must recognize unique features distinguishing digital assets from traditional financial instruments while avoiding one-size-fits-all approaches that fail to address actual risk profiles. Consumer protection represents the third principle,… The post Federal Reserve says US banks should serve crypto without fear of penalties appeared on BitcoinEthereumNews.com. Federal Reserve Vice Chair for Supervision Michelle Bowman acknowledged that crypto firms experienced debanking due to regulatory uncertainty. During the Wyoming Blockchain Symposium on Aug. 19, Bowman also announced a fundamental shift in the Fed’s approach to blockchain innovation. She revealed the central bank eliminated reputational risk considerations from bank supervision in late June to address barriers preventing financial institutions from serving digital asset companies engaged in legal activities. The Fed official stated: “Your industry [crypto] has already experienced significant frictions with bank regulators applying unclear standards, conflicting guidance, and inconsistent regulatory interpretations.” Bowman emphasized that banks should not face penalties for serving customers conducting lawful business operations, stating that customer selection decisions “lie solely within the purview of bank management” rather than regulatory interference. Furthermore, she noted the Fed’s transition from an “overly cautious mindset” toward embracing blockchain technology within the traditional banking system. She warned that regulators must choose between shaping technological frameworks or allowing innovations to bypass banks entirely, potentially diminishing the banking sector’s economic relevance. The Fed is updating examination manuals and supervisory materials to ensure lasting implementation of the reputational risk removal policy. Four-principle regulatory framework The Fed Vice Chair established four core principles guiding the central bank’s new approach to digital asset regulation. Regulatory certainty tops the list, addressing industry concerns about investing in blockchain development without clear supervisory standards. Bowman questioned whether companies would partner with banks, knowing that regulatory scrutiny brings uncertainty, rather than pursuing alternatives outside the banking system. Tailored regulation forms the second principle, requiring supervisors to evaluate use cases based on specific circumstances rather than applying worst-case scenario expectations. The Fed must recognize unique features distinguishing digital assets from traditional financial instruments while avoiding one-size-fits-all approaches that fail to address actual risk profiles. Consumer protection represents the third principle,…