Fed: Banks able to serve crypto customers, BTC up 3%
Bitcoin bounced after comments from U.S. Federal Reserve Chair Jerome Powell at the FOMC meeting signaled that banks are allowed to serve crypto clients.
Crypto markets initially had a muted reaction to the Federal Open Market Committee’s decision on Wednesday, Jan. 29, to keep interest rates unchanged. The Fed maintained its 4.25% to 4.50% federal funds rate, citing “somewhat elevated inflation,” as analysts had predicted.
Bitcoin (BTC) edged up 0.5% minutes after the Fed released its FOMC minutes. The uptrend accelerated to 3%, pushing BTC above $103,500 heading into the U.S. evening trading session.
Responding to a crypto-related question, Powell stated that U.S. banks are “perfectly able” to serve crypto customers, provided they comply with risk disclosure requirements. He emphasized that de-banking legally compliant customers is not Fed policy, addressing concerns related to the so-called “Operation Choke Point 2.0.”
“Great regulation on crypto would be helpful,” Powell added.
He also reiterated that the U.S. central bank cannot legally hold BTC, prompting Senator Cynthia Lummis to propose changing the law if necessary.
Digital asset markets flipped green following Powell’s remarks while major U.S. equity indices closed the day slightly in the red.
Unchanged federal interest rates split sentiment between bulls and short-term bears. Bulls argued that Bitcoin could surge in February, as it has in eight of the last 12 Februaries. They also speculated that President Trump’s pro-crypto stance could provide additional support for BTC and the broader market.
Bears, on the other hand, contended that static interest rates could deter new capital inflows into BTC and related products, such as Wall Street’s spot Bitcoin exchange-traded funds.
Meanwhile, reports suggest that President Trump has encouraged Powell and the Fed to implement lower interest rates. However, Powell stated that he has had no contact with Trump so far and did not comment on the rumored request.
