Jerome Powell’s Crypto Stance: Fed Greenlights Banks & Impacts Market
2025-06-25 08:51:41Fed Chair Powell’s Crypto Green Light: Banks Get Clearance as Markets Await Rate Cuts
Could Jerome Powell’s latest testimony mark a turning point for crypto adoption?
In a pivotal moment for the crypto industry, Federal Reserve Chair Jerome Powell delivered a dual message during his Congressional testimony this week. While reiterating a cautious stance on interest rates, he quietly unlocked a major barrier for traditional finance’s involvement in digital assets—a move that could reshape the landscape of institutional crypto adoption.
Powell’s Crypto Banking Policy Shift: “Banks Are Free to Engage”
The most significant takeaway for the crypto market came when Powell explicitly stated that U.S. banks are “free to conduct crypto activities” as long as they adhere to safety and soundness standards. This clarification removes years of regulatory ambiguity, effectively giving Wall Street a green light to deepen its involvement in digital asset services.
Key Implications:
Banking Access: Crypto firms, long plagued by banking restrictions (remember the 2023 Silvergate collapse?), may now find it easier to secure financial partnerships.
Stablecoin Legislation: Powell endorsed Congressional efforts to establish a regulatory framework for stablecoins, calling it a “great thing” and emphasizing the need for clarity.
Institutional On-Ramps: With banks no longer discouraged from crypto dealings, asset managers and hedge funds could see smoother fiat-crypto transitions.
The Rate Cut Standoff: How Powell’s Hawkishness Is Keeping Crypto Range-Bound
While crypto banking received a boost, Powell’s broader economic outlook left traders in suspense. Despite mounting political pressure—including public demands from former President Trump for “at least two to three points” of rate cuts—the Fed Chair held firm, citing lingering inflation risks from tariffs and a still-strong labor market.
Market Reaction:
Bitcoin ($106,449) and Ethereum ($2,432) remained range-bound, with BTC finding support near $104,000–$105,000 and ETH hovering around $2,400.
Derivatives data shows traders are hedging: Bitcoin put options surged, signaling caution ahead of key inflation data.
Analysts note that ETF inflows are stabilizing BTC prices, preventing sharper swings.
The Trump Factor: Political Pressure vs. Fed Independence
The Fed’s stance has drawn fierce criticism from Trump and allies like Senator JD Vance, who accused Powell of “refusing to act” despite signs of economic slowing. Trump’s overnight Truth Social post demanded the Fed “save the U.S. more than $800 billion per year” through aggressive cuts—a move crypto bulls argue could unleash capital into risk assets like Bitcoin.
Yet Powell remained unmoved: “We don’t consider politics in making rate decisions,” he asserted, emphasizing data dependency.
What’s Next for Crypto?
Banking Expansion: With regulatory hurdles easing, expect major banks to announce crypto custody or trading services in coming months.
Rate Cut Bets: Markets still price a 22% chance of a July cut, but September remains the consensus pivot point. A dovish shift could trigger a crypto rally.
Geopolitical Wildcards: The Israel-Iran ceasefire has cooled safe-haven demand, but any flare-up could reignite crypto volatility.
Expert Take:
David Morrison of Trade Nation notes, “The most bullish scenario would be a Fed dovish pivot or de-escalation in trade tensions—either could push Bitcoin toward retesting its all-time high.”
Final Thought: A Watershed Moment for Crypto Banking?
Powell’s testimony may be remembered as the day crypto banking shed its pariah status. Yet with rate cuts delayed, the market’s next big move hinges on inflation data and whether banks seize this new opening.
Share your thoughts on our X: Will Powell’s banking shift do more for crypto adoption than rate cuts?
Disclaimer: The information provided in this section is for reference only and does not represent any investment advice or the official views of FameEX.
Sources:
Cryptorank.io - In Major Policy Clarification, Fed Chair Says Banks Are 'Free to Engage' With Crypto
Ainvest - Crypto Market Range-Bound Amid Powell's Uncertainty
CoinDesk - Fed's Powell Reiterates Patience on Rates in Congressional Testimony
Coinpedia - JD Vance Slams Fed Chair Jerome Powell for Refusing Interest Rate Cut
CryptoSlate - Powell Reaffirms Fed Has No Issues With Banks Conducting Crypto Activities
Forbes - ‘Buckle Up’—Bitcoin And Crypto Brace For A Huge Fed Flip
Investopedia - Fed Chair Powell Holds Firm On 'Wait-And-See' Approach To Rate Cuts
LinkedIn - Global markets in limbo: The Fed's rate decision and Bitcoin's next move