Fed's Bowman Urges Less 'Cautious Mindset' on Crypto — Barrons.com
By Nicole GoodkindThe Federal Reserve's top banking supervisor is calling for a fundamental shift in how regulators approach emerging technologies, signaling a more aggressive embrace of cryptocurrency, blockchain, and artificial intelligence in the traditional banking system.Speaking at the Wyoming Blockchain Symposium on Tuesday afternoon, Federal Reserve Governor Michelle Bowman urged her fellow regulators to abandon their "overly cautious mindset" and work proactively with financial institutions to adapt to technological change. Her comments mark a departure from the Fed's historically conservative approach to financial innovation."Despite this past inertia, change is coming," Bowman said. "We must choose whether to embrace the change and help shape a framework that will be reliable and durable — ensuring safety and soundness and incorporating the benefits of both efficiency and speed — or to stand still and allow new technology to bypass the traditional banking system altogether."Bowman, who serves as the Fed's vice chair for supervision, said that for her, "the choice is clear."Much of Bowman's remarks focused on stablecoins, digital currencies designed to maintain stable value by being pegged to traditional assets like the U.S. dollar."One recent development — Congress passing the GENIUS Act and the president signing it into law — has brought stablecoins to the forefront of many discussions," Bowman said. The legislation established a comprehensive framework for stablecoin regulation, potentially opening the door for more institutional adoption."They are now positioned to become a fixture in the financial system, with implications and opportunities for the traditional banking system, including the potential to disrupt traditional payment rails," she said.Bowman also outlined plans for a more nuanced regulatory approach, including a plan to change banks' regulatory commitments based on their size and complexity. "Having clear and transparent rules is not effective if these rules are unnecessarily burdensome and restrictive," she said.Earlier this summer, the Fed announced that reputational risk would no longer be a component of its bank exams. President Donald Trump, who nominated Bowman to the Federal Reserve Board, also signed an executive order this month that required banking regulators to remove the use of reputational risk from their guidance documents, manuals, and other materials.Bowman's name has been floated as a possible successor to current Fed Chair Jerome Powell when his term expires in May 2026. She brushed aside questions about whether she would be interested in the job in a Tuesday morning interview with Bloomberg.Still, Bowman acknowledged that the Fed is in a moment of transition. "We stand at a crossroads: we can either seize the opportunity to shape the future or risk being left behind," she said.Write to Nicole Goodkind at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.