In a major shift for U.S. financial policy, Federal Reserve Vice Chair for Supervision Michelle Bowman announced a new regulatory approach to digital assets during the Wyoming Blockchain Symposium on August 19.
This change removes “reputational risk” from the Federal Reserve’s bank supervision process—a move that clears the way for traditional banks to partner with legal crypto firms without fear of regulatory penalties.
Banks Can Now Partner with Legal Crypto Firms
As of June, the Fed no longer considers reputational risk when evaluating bank activities. This means financial institutions are now free to serve law-abiding cryptocurrency and blockchain businesses—marking a turning point for the integration of digital assets into the U.S. banking system.
Bowman emphasized that crypto companies should not be shut out due to unclear or overly cautious oversight. Instead, banks should be empowered to innovate and support emerging technologies within the bounds of existing law.
To guide this shift, Bowman introduced a four-principle framework:
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Regulatory Certainty – Clear, consistent rules for banks and crypto firms
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Tailored Rules – Flexible regulation based on specific risks
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Consumer Protection – Strong safeguards for users and investors
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U.S. Competitiveness – Support for innovation to maintain global leadership
Fed Pushes for Blockchain Integration in Finance
Bowman also highlighted blockchain’s potential to transform traditional finance by reducing transaction costs, lowering settlement risk, and enhancing system efficiency. She called for greater collaboration between regulators and industry leaders to ensure the U.S. financial system doesn’t fall behind.
Without clear, forward-thinking regulation, she warned, innovation could bypass traditional banks altogether—undermining their role in the global economy.
The new policy is designed to encourage responsible blockchain adoption while protecting consumers and maintaining compliance. By opening the door to crypto partnerships, the Federal Reserve aims to support a more competitive and modern financial system.
