YEREVAN (CoinChapter.com) — Federal Reserve Chair Jerome Powell stated that banks can offer crypto services if they manage risks properly. Speaking at a press conference, he said banks must operate safely due to risks tied to digital assets.
“We’re not against innovation,”
Powell said.
“And we certainly don’t want to take actions that would cause banks to terminate customers who are perfectly legal just because of excess risk aversion.”
Jerome Powell on Crypto Services. Source: Ledger InsightsDespite this, some in the banking sector interpret his remarks as a warning. FOX Business reported that a banker viewed Powell’s comments as implying:
“I wouldn’t do it, but you [banks] make your own decisions.”
This suggests that while banks are allowed to engage with crypto, they do so at their own risk.
Banker’s Reaction to Powell’s Crypto Stance. Source: Eleanor TerrettRegulatory Barriers Still Limit Crypto Banking
US regulators have discouraged banks from working with crypto firms. A court order forced the Federal Deposit Insurance Corporation (FDIC) to release letters sent to banks advising them to pause crypto-related operations. These letters, while not explicitly banning crypto banking, created uncertainty among financial institutions.
Coinbase filed a lawsuit that revealed these letters, seeking proof of regulatory pressure on banks to halt crypto services. While the letters did not confirm systematic de-banking, the incoming FDIC acting chairman acknowledged that the issue exists. Congress is also investigating whether regulators pressured banks to sever ties with crypto firms, drawing parallels to Operation Choke Point, where certain industries faced restrictions due to regulatory concerns.
Coinbase Demands Clarity on Banking Rules
Coinbase, the largest custodian for Bitcoin ETFs, is pushing regulators to confirm that banks can provide crypto services. On Feb. 4, the company sent a letter to the Office of the Comptroller of the Currency (OCC), the Federal Reserve, and the FDIC, urging them to clarify crypto banking regulations.
The letter also asked the OCC to withdraw an interpretive letter that requires banks to go through an approval process before offering crypto services. Coinbase wants the Fed and FDIC to confirm that state-chartered banks can provide and outsource crypto custody and execution services.
“It’s important for regulators to make clear that banks can work with third-party providers in providing trading and exchange services to their customers,”
said Coinbase Chief Policy Officer Faryar Shirzad.
Legal Disputes Over Crypto Banking Continue
Coinbase has been in legal disputes with regulators over crypto banking. In June 2024, the company sued the SEC and FDIC, alleging they attempted to block crypto firms from accessing banking services.
Coinbase’s Chief Legal Officer Paul Grewal reiterated these claims in January 2025, arguing that the FDIC withheld documents in a Freedom of Information Act (FOIA) lawsuit. He stated that the agency did not disclose some “pause letters” related to crypto banking.
Paul Grewal Criticizes FDIC. Source: Paul GrewalSome banks have cautiously entered the crypto sector. BNY Mellon is offering crypto custody services, while others remain hesitant due to regulatory concerns. Reports suggest that the FDIC asked some banks to pause crypto activities, adding to the uncertainty.
Crypto Banking Under Trump’s Administration
With Donald Trump back in office, the crypto industry is watching for potential regulatory changes. Coinbase has been working with the Trump administration and is looking for a clearer regulatory framework.
The company is advocating for crypto custody and execution services to be fully recognized. Many Bitcoin ETFs launched last year, and banks want clear rules on their role in the crypto sector. However, regulatory uncertainty continues to impact banks’ involvement with crypto services.
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