Jerome Powell defies Trump, keeps crypto restrictions at Fed
Crypto politicians are discussing a number of changes in Federal Reserve policies that seem to indicate Jerome Powell’s willingness to defy Donald Trump.
Despite the Fed’s claim to have withdrawn crypto guidance in compliance with one of Trump’s executive orders, Senator Cynthia Lummis and Wyoming politician Caitlin Long call its actions mere lip service.
Re-asserting Powell’s independence from the executive branch this month, Trump relented on speculation that he could fire Powell from his position of chairman at the world’s most powerful central bank.
Emboldened, Powell has limited his compliance with Trump’s January 23 executive order, “protecting and promoting fair and open access to banking services.”
Jerome Powell reduces crypto banking restrictions — somewhat
According to the Federal Reserve Board, its banking supervisors have narrowly withdrawn guidance that restricted certain crypto activities at banks.
In particular, the Fed rescinded an expectation that banks provide advance notice of crypto-asset activities, removed a cumbersome non-objection process for certain stablecoin activities, and lightened guidance about banks’ crypto limitations and crypto-asset exposures.
It has stamped withdrawn guidance in red lettering.
However, pro-crypto commentators say those actions fall short. “We are not fooled,” wrote Senator Lummis.
Read more: Crypto wants Trump to replace Jerome Powell with a pro-stimulus Fed chair
According to her, the Fed is still violating the law on master account applications, has not withdrawn an unsafe and unsound policy statement on crypto, and of course, is still perpetuating Operation Chokepoint 2.0.
Some alarmists blame the supposed conspiracy for a vast array of anti-crypto banking actions by the government, although it might not exist at all.
Caitlin Long joins Cynthia Lummis in complaining
Wyoming politician and crypto bank founder Caitlin Long flagged supposedly restrictive guidance that the Fed board approved on January 27, 2023. To her dismay, she found that guidance remained in place.
That guidance requires banks to make sure their crypto custodial services comply with “consumer, anti-money laundering, and anti-terrorist financing laws.” It also requires banks to maintain risk management and internal controls for their activities.
In short, the Federal Reserve reversed previous guidance for digital assets outlined in supervisory letters issued in 2022 and 2023. It will now monitor banks’ digital asset-related activities through a “normal supervisory process” rather than requiring advance notifications.
The Fed also joined the FDIC and the Office of the Comptroller of the Currency in withdrawing joint guidance on banks’ digital asset-related activities and exposure issued in 2023. It will coordinate with these two regulatory bodies to determine whether new guidance is warranted.
According to pro-crypto politicians, those actions fall short of Trump’s intention in his executive order and other laws.
Of course, Fed Chair Powell is ultimately responsible for ensuring the Fed’s compliance with all laws, but his actions continue his tradition of conservative and deliberate tweaks to policy — rather than the drastic overhaul that crypto would prefer.
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