- Powell says stablecoins now tie directly to credit markets and need urgent oversight.
- The Fed adds Bitcoin and Ethereum ETF exposure to systemic risk modeling.
- Crypto rails like tokenized settlements must follow standard capital risk rules.
The Federal Reserve has formally recognized crypto’s integration into U.S. markets and flagged stablecoins as regulatory priorities. As reported by Crypto Patel, Chair Jerome Powell called for a legal framework to govern the sector’s systemic rise. The speech confirmed that crypto now plays a material role across institutional and consumer financial layers.
Powell emphasized that retail and institutional crypto participation is growing across asset management and bank-linked platforms. U.S. households increasingly hold digital assets, while funds deploy crypto-linked instruments at scale. The Fed is now urging lawmakers to accelerate national legislation on stablecoin standards and market interoperability.
Stablecoins Labeled Primary Focus for Lawmakers and Fed
The Fed has prioritized stablecoins due to their growing links to credit markets and core financial system operations, he noted in a speech. Powell warned that without regulation, fiat-backed stablecoins could enable opaque leverage and create off-chain liquidity mismatches in crisis periods.
The speech outlined structural requirements for reserve disclosures, licensed issuance, and federal oversight across payment and remittance functions. Powell stated that state-level frameworks lack cohesion and present risks as stablecoin usage grows in decentralized lending and tokenized transactions. Tether and USDC remain key examples driving the urgency.
Institutional Exposure and Bank-Crypto Links Under Scrutiny
The Fed has received reports from regulated banks showing rising demand for crypto custody, settlement, and structured product exposure. These trends have prompted the central bank to initiate updated risk models addressing digital asset stress behavior and exposure limits.
Asset managers have incorporated Bitcoin and Ethereum into ETFs, bringing direct exposure into regulated investment portfolios. The Fed now includes these allocations in systemic oversight models covering liquidity flows and fund concentration risks during market instability.
CBDC Posture Unchanged, Risk Management Takes Priority
The Fed has not changed its stance on launching a central bank digital currency, which remains a long-term legislative matter. Powell confirmed that progress depends on congressional authority, multi-agency coordination, and public policy support rather than executive decisions.
Crypto market infrastructure, such as tokenized repo markets and real-time asset rails, must operate within existing capital rules. The Fed stated that oversight of these mechanisms will mirror conventional financial risk frameworks applied across bank and non-bank financial entities.
