The Federal Reserve’s top regulatory chief has suggested that central bank staff should be allowed to hold crypto to better understand the technology.
Speaking at a blockchain event in Wyoming on Tuesday, Fed Vice Chair for Supervision Michelle Bowman said the institution should consider permitting employees to own limited “amounts of crypto or other types of digital assets” so they can gain practical knowledge of how they work.
“We will soon be establishing a framework for supervising issuers of these assets. There’s no replacement for experimenting and understanding how that ownership and transfer process flows.”
Michelle Bowman
Crypto Innovation vs. Regulatory Caution
In her remarks, Bowman criticized what she called an “overly cautious mindset” among bank regulators, urging them to be more open to innovation and to acknowledge the importance of adopting technology within the traditional financial system.
She noted that while some bankers fear blockchain could disrupt existing business models, the technology has the potential to reshape the banking sector “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.”
Michelle Bowman
Crypto Prohibited for US Fed Staff
At present, Fed staff and their spouses are broadly prohibited from owning cryptocurrencies, exchange-traded funds tied to digital assets, or shares in crypto firms. These restrictions were introduced in early 2022, after it emerged that three senior Fed officials had engaged in unusual trading in 2020, while the central bank was rolling out emergency measures to support the U.S. economy during the COVID-19 crisis.
At present, most Federal Reserve employees and their spouses are prohibited from holding cryptocurrencies or investment products tied to the sector, including exchange-traded funds and shares of crypto-related companies.
The Fed introduced these stricter rules in early 2022, following revelations that three senior officials had engaged in unusual trading activity in 2020 while the central bank was implementing emergency measures to stabilize the U.S. economy during the onset of the COVID-19 pandemic.
Bowman did not clarify which types of crypto assets or what level of investment she would recommend permitting for Fed staff. However, her remarks mark another example of regulators expressing a more crypto-friendly stance under the Trump administration.
