Federal Reserve Governor Calls For Regulators To Embrace Crypto

Federal Reserve (Fed) Governor Michelle Bowman is urging US regulators to abandon their “overly cautious mind-set” regarding cryptocurrencies, blockchain technology, and artificial intelligence (AI). 

Speaking at the Wyoming Blockchain Symposium, Bowman emphasized the need for a proactive approach to adapt to emerging technologies, marking a departure from the more conservative stance of previous regulatory bodies.

Bowman Advocates For Flexible Oversight 

Bowman, who was nominated to the Federal Reserve Board by President Donald Trump in 2018 and appointed as Vice Chair for Supervision earlier this year, stated, “Despite this past inertia, change is coming.” 

She underscored the importance of choosing to embrace this change and creating a regulatory framework that is both reliable and efficient. “We must ensure safety and soundness while incorporating the benefits of speed and efficiency,” she asserted. 

A key topic in her address was the recently passed GENIUS Act, which regulates stablecoins. This legislation, signed into law by President Trump, has positioned stablecoins at the forefront of discussions about the future of the financial system. 

According to Bowman, dollar-pegged cryptocurrencies have the potential to disrupt traditional payment infrastructures while offering new opportunities for the banking sector.

In addition to discussing stablecoin regulation, Bowman revealed that she is working on plans to adjust banks’ regulatory commitments according to their size and complexity. 

Fed’s Discontinuation Of Crypto Oversight Program

The Federal Reserve also disclosed last week the discontinuation of its “novel activities” supervision program, which was designed to monitor banks’ interactions with the cryptocurrency and fintech sectors. 

This program, launched in 2023, faced criticism for imposing significant restrictions on banks engaging with digital assets. The Fed has determined that such specialized oversight is no longer necessary, citing an improved understanding of the risks involved and how banks can effectively manage these challenges.

As reported by Bitcoinist, the central bank’s move is part of a broader effort to align with President Donald Trump’s vision of making America the “crypto capital of the world.” 

By incorporating digital asset oversight into its conventional bank supervision framework, the Federal Reserve aims to foster an environment that supports innovation in the financial sector.

Speculation about Bowman’s future role has also emerged, with her name mentioned as a potential successor to current Fed Chair Jerome Powell when his term concludes in May 2026. However, during a recent Bloomberg interview, she deflected questions about her aspirations for that position.

Governor Bowman’s remarks and the regulatory changes she advocates reflect a pivotal moment for the US financial landscape, as regulators seek to balance innovation with the need for safety and stability in the banking system.

Featured image from DALL-E, chart from TradingView.com