The Federal Reserve’s top bank cop is heading to Capitol Hill with a message that boils down to: yes, banks and crypto firms can play nicely — but rules must be followed.
Summary
- Fed Governor Michelle Bowman will urge Congress to support new rules for banks and stablecoins.
- Innovation must be encouraged but supervised to protect financial stability, she says, according to Bloomberg News.
- Bowman will also update lawmakers on bank capital reforms amid broader tensions between banks and crypto firms over charters and regulatory parity.
In prepared remarks for Tuesday’s House Financial Services Committee hearing, Fed Governor Michelle Bowman said she plans to push for new regulations governing both banks and stablecoin issuers, aiming to create “healthy competition” between Wall Street and the fast-moving digital asset world, Bloomberg reported.
“As a regulator, it is my role to encourage innovation in a responsible manner, and we must continuously improve our ability to supervise the risks to safety and soundness that innovation presents,” Bowman said.
She added that new technologies can make banking more efficient and broaden access to credit, while also leveling the regulatory playing field between traditional lenders and their crypto and fintech rivals.
Bowman emphasized she’ll work with other agencies to develop capital and diversification standards for stablecoin issuers under the newly enacted Genius Act. The law requires issuers to register formally and maintain dollar-for-dollar reserves — essentially telling stablecoin companies that acting like a bank requires bank-level discipline.
Stablecoin turf war
Her remarks land squarely in the middle of a tussle between banks and crypto firms over charters — the golden ticket that gives companies legitimacy and access to the financial system.
Crypto firms argue charters would offer clarity and compliance pathways. Banks counter that handing them out too liberally risks creating charter-light institutions.
Bowman also plans to update lawmakers on long-delayed capital reform efforts, including the Basel III Endgame overhaul. She said her priority is “bottom-up” calibration — not reverse-engineering rules to hit a predetermined target.
The Fed is currently fine-tuning capital surcharges for big banks and reviewing a softened version of the Biden-era proposal.
In short: Bowman is trying to referee the increasingly crowded financial arena — while reminding both banks and crypto firms that no one gets to skip leg day when it comes to capital requirements.
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