Fed Official Says Staff Should Be Allowed To Hold Crypto – Crypto News

The Federal Reserve’s top regulatory official says staff from the US central bank should be allowed to invest a small amount in crypto to help them understand the technology.

Fed vice chair for supervision Michelle Bowman said at a blockchain event in Wyoming on Tuesday that the regulator should consider allowing its staff “to hold de minimus amounts of crypto or other types of digital assets so they can achieve a working understanding of the underlying functionality.”

“We will soon be establishing a framework for supervising issuers of these assets,” she added.

“There’s no replacement for experimenting and understanding how that ownership and transfer process flows.”

Currently, most Fed staffers and their spouses are barred from owning crypto or products that concentrate on crypto, such as exchange-traded funds or shares in crypto companies.

The Fed tightened its rules on all investments in early 2022 after it was revealed that three top officials had unusual trading activity in 2020, as the regulator took action to support the US economy in the early days of the COVID-19 pandemic.

Allowing crypto could help recruitment, rulemaking 

Bowman said the Fed staff investment restrictions “may be a barrier to recruiting and retaining examiners with the necessary expertise,” and easing the rules would help existing staff better understand the technology.

“I certainly wouldn’t trust someone to teach me to ski if they’d never put on skis, regardless of how many books and articles they have read, or even wrote, about it.”

Bowman urges Fed not to “stand still”

In her speech, Bowman said bank regulators had an “overly cautious mindset” and urged them to be less skeptical of new financial products and “recognize the utility and necessity of embracing technology in the traditional financial sector.”

She said some bankers are concerned that blockchain technology threatens traditional business models, but that technology could “change the banking system regardless of how banks and regulators choose to respond.”

“We must choose whether to embrace the change and help shape a framework that will be reliable and durable — ensuring safety and soundness and incorporating the benefits of both efficiency and speed — or to stand still and allow new technology to bypass the traditional banking system altogether,” she added. 

“From a regulator’s perspective, the choice is clear.”

Related: New crypto advocacy group debuts at Wyoming summit

Bowman said she recognized the risks in adopting new technology, but those could be offset or “at least determined to be manageable when we recognize and consider the potentially extensive benefits of new technology.”

Trump’s crypto-friendly push

Bowman didn’t specify the types of crypto products or what amounts she would suggest the Fed allow, but her comments are the latest crypto-friendly remarks regulators have taken under the Trump administration.

On Friday, the Fed said it would end a supervision program for crypto and blockchain-related activities undertaken by banks, which the Biden administration set up in 2023.

Trump also signed an executive order earlier this month directing banking regulators to investigate claims of debanking made by the crypto sector and conservatives.

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