Bitcoin adoption among United States financial institutions could see a major boost after the US Federal Reserve withdrew its guidance discouraging banks from engaging with cryptocurrency.
On April 24, the Fed withdrew its 2022 supervisory letter that served as guidance to deter banks from engaging in crypto and stablecoin activities. The withdrawal spurred a notable uplift in Bitcoin (BTC) investor sentiment.
The 2022 guidance initially warned that crypto may pose risks to investors and the stability of the US financial system.
The Fed’s move means that “banks are now free to begin supporting Bitcoin,” said Michael Saylor, co-founder of the world’s largest corporate Bitcoin holding firm, Strategy, in an April 25 X post.
The Fed’s decision “is a significant development, as it will simplify the path to institutional adoption,” according to Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum.
“The withdrawal of this particular guidance ensures that crypto assets will be overseen through standard supervisory processes,” she told Cointelegraph, adding:
“We still need to have GENIUS and STABLE bills to be passed to further harmonize the crypto activities amongst Fed-supervised firms and other market participants. The combination of legislative effort will be the main driver behind the institutional adoption.”
The Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act, passed the US House Financial Services Committee with a 32–17 vote on April 2. The bill aims to create clear regulatory guidelines for dollar-denominated stablecoins.
The GENIUS Act, short for Guiding and Establishing National Innovation for US Stablecoins, passed the Senate Banking Committee by a vote of 18–6 on March 13.
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Fed’s shift marks end of us regulatory hostility
The Federal Reserve’s decision may be a “meaningful turning point” for Bitcoin’s institutional adoption in the US, according to Eneko Knörr, co-founder and CEO of Stabolut, a yield-bearing stablecoin project.
“Up until now, US regulatory hostility made it virtually impossible for traditional financial institutions to participate in this space,” Knörr told Cointelegraph.
“With the recent shift in the Fed’s guidance, the door is finally open. This unlocks an enormous opportunity for banks — one that until now has been dominated by players like Coinbase and other crypto-native firms,” Knörr added.
Knörr added that banks are now likely to move quickly to meet client demand and retain market share previously captured by crypto-native firms like Coinbase.
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Bitcoin adoption among financial institutions is also lagging in Europe, with less than 20% of European banks offering crypto services, despite the rising investor demand and regulatory clarity in the region.
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