Federal Reserve says US banks should serve crypto without fear of penalties

Federal Reserve Vice Chair Michelle Bowman acknowledged crypto firms experiencing debanking due to regulatory uncertainty. The Fed has shifted its approach to blockchain innovation, removing reputational risk considerations from bank supervision. Bowman outlined four core principles for digital asset regulation: regulatory certainty, tailored regulation, consumer protection, and American competitiveness. She emphasized the importance of technology integration and supervision changes, including allowing Federal Reserve staff to hold minimal digital assets for hands-on learning. Bowman highlighted the potential of tokenization for faster asset transfers and reduced costs, calling for industry engagement to combat fraud and promote innovation in the financial system.