US Fed: The Federal Reserve and the Office of the Comptroller of the Currency, which serve as the primary banking regulators in the United States, are poised to ease their stringent approach towards digital assets following President Trump’s full endorsement of the sector, as reported by On The Money.
Executives at leading financial institutions, including JP Morgan and Bank of America, are increasingly hopeful that regulatory bodies will relax their historically negative stance on cryptocurrencies. They anticipate being able to offer fundamental services to cryptocurrency clients, such as the custody of digital assets and the ability to purchase bitcoin exchange-traded funds at their branches.
This shift in perspective among the nation’s banking authorities was initiated by President Trump’s engagement with the $3.5 trillion cryptocurrency market and its prominent leaders, coupled with his commitment to dismantle the regulatory measures imposed during the Biden administration, as noted by Fox Business’s Eleanor Terrett.
Earlier this month, Trump took decisive action when his Securities and Exchange Commission overturned Biden’s stringent accounting regulations that had posed challenges for banks in managing digital assets.
This development may further propel the rise in cryptocurrency values, including Bitcoin, which is the most widely recognized digital currency and has already been experiencing a notable post-election surge. Over the past year, Bitcoin has appreciated by nearly 124%, approaching a trading value of $100,000.
“I anticipate that banking regulators will align with the administration’s new stance on cryptocurrency, leading to a swift entry of banks into this sector,” stated Mike Lempres, the former chairman of the now-defunct Silvergate Capital Corporation and a consultant for cryptocurrency firms, in an interview with Terrett.
Silvergate opted for voluntary liquidation in 2023 due to the excessively burdensome regulatory demands that followed the FTX incident.
“Blockchain technology has the potential to significantly enhance banks’ capabilities in serving customers and adhering to Bank Secrecy Act regulations,” Lempres further remarked.
The Federal Reserve and the Office of the Comptroller of the Currency (OCC), which operates under the Treasury Department, serve as semi-independent regulators for the nation’s major banks and could, in theory, disregard the SEC’s guidance. Following the downfall of Sam Bankman-Fried’s FTX crypto exchange and the misuse of customer funds, both entities had taken a strong stance against cryptocurrency within the banking sector.
However, with the Trump Administration now fully endorsing cryptocurrency and Congress moving towards establishing a new regulatory framework for digital assets, bankers report that the signals they are receiving from the Fed and OCC indicate that they will soon receive authorization to engage in the cryptocurrency market in ways that were previously unavailable.
Earlier this month, Trump took significant steps when his Securities and Exchange Commission rescinded Biden’s stringent accounting regulations, which had created difficulties for banks in handling digital assets.
Cryptocurrency is widely regarded as a volatile and high-risk investment; for instance, on Sunday, Bitcoin experienced a decline of $10,000, dropping to $92,000, only to rebound and increase by another $10,000 on Monday, ultimately closing at $110,000. Some banking analysts express concern that such extreme fluctuations could threaten the stability of the banking system, depending on the extent of a bank’s involvement in the cryptocurrency market in the future.
Nevertheless, bankers anticipate receiving approval to expand their cryptocurrency operations in the near future, in light of Trump’s directive to position the United States as the global leader in cryptocurrency. An executive from Bank of America stated, “I’m confident we’ll see some encouraging guidance from the Fed and the OCC in the coming months.” Additionally, BofA’s CEO, Brian Moynihan, recently indicated that the bank is prepared to engage in cryptocurrency payments as soon as regulatory conditions permit.
Last week, Federal Reserve Chairman Jerome Powell remarked during his post-Fed meeting press conference that banks are “perfectly able” to cater to cryptocurrency customers and expressed a desire to avoid actions that might lead banks to “debank” or terminate relationships with customers focused on cryptocurrency due to excessive risk aversion.
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