Federal Reserve Vice Chair for Supervision Michelle Bowman outlined the central bank’s new approach to innovation yesterday, one that embraces blockchain technology and digital assets within the traditional banking system. Her speech marked a significant departure from the central bank’s previously cautious stance.
Speaking at the Wyoming Blockchain Symposium, Bowman warned that regulators need to take a positive role. “We must choose whether to embrace the change and help shape a framework that will be reliable and durable,” she said, “or to stand still and allow new technology to bypass the traditional banking system altogether.” Notably, the Federal Reserve was not part of the President’s Working Group on Digital Asset Markets. It’s role in the GENIUS Act for stablecoins is also somewhat limited, despite the potential for stablecoins to impact monetary policy.
The Fed’s evolving position reflects growing pressure to provide clearer guidance for banks exploring tokenization, stablecoins and cryptocurrencies. Bowman acknowledged the regulatory uncertainty that has deterred partnerships between traditional banks and crypto firms, asking: “Would you choose to partner with banks, knowing that this will bring regulatory scrutiny and uncertainty, or would you develop alternatives outside of the banking system?”
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