The new supervisor's policy orientation in bank industry access and stablecoin regulation will directly affect whether crypto companies can obtain basic banking services.
Author: ChandlerZ, Foresight News
Cover: Photo by Steven Abraham on Unsplash
Recently, the US Senate passed the nomination of Michelle Bowman as the Vice Chair of Supervision at the Federal Reserve with 48 votes in favor and 46 votes against. This Republican from Kansas will replace Michael Barr and take on the highest position in the Fed's regulatory field, directly responsible for the supervision of stablecoin issuers and crypto-related institutions in the future.
Michelle Bowman: From Board Member to Regulatory Head
Michelle Bowman was born and raised in Kansas, holding a bachelor's degree in Advertising and Journalism from the University of Kansas and a law doctorate from Washburn University Law School, and is a registered lawyer in New York. In her early years, she held multiple positions in the US Congress, serving in Senator Bob Dole's office and as a legal counsel for the House Committees on Transportation and Infrastructure, and Government Reform and Oversight. Starting in 2002, she entered the federal government administrative system, serving as the Director of Congressional and Governmental Affairs at FEMA, and later as Deputy Assistant Secretary and Policy Advisor at the Department of Homeland Security, providing policy support for the first Secretary of Homeland Security, Tom Ridge.
After working in the federal government, Bowman went to London to establish and manage a government and public affairs consulting firm. She then returned to her hometown in 2010, joining Farmers & Drovers Bank in Kansas as Vice President for seven years, gaining an in-depth understanding of community bank operations. In 2017, she was appointed as the Kansas Bank Commissioner, responsible for supervising banking institutions statewide, and joined the Federal Reserve Board in 2018.
During her tenure at the Federal Reserve, Bowman was known for her focus on small and medium-sized banks and emphasis on balancing regulation and innovation. She repeatedly stressed the need to avoid using bank regulatory tools to achieve non-financial policy objectives, calling for maintaining the soundness of the banking system while encouraging innovation. As the Vice Chair of Supervision, she will lead the access and regulatory policies for stablecoins, crypto assets, and fintech enterprises, and is seen as a key figure who might shift the Fed's stance.
She has previously questioned central bank digital currencies (CBDC) and warned about the potential risks of stablecoins in the absence of clear rules. In the April hearing, Michelle did not clearly state her policy inclination towards crypto assets.
The position of Vice Chair of Supervision at the Federal Reserve was established after the 2008 financial crisis, with the aim of separating the Fed's monetary policy and regulatory responsibilities. Upon taking office, Michelle will have direct influence on crypto business access and stablecoin regulation. She also recently stated that the Federal Reserve will revise regulatory rules for the largest and most complex domestic banks, revealing that the Fed will soon launch several projects aimed at relaxing requirements and simplifying regulation, involving multiple long-criticized regulatory areas.
Potential Shift in Regulatory Attitude
Against the backdrop of an overall warming crypto regulatory environment in the US, the Federal Reserve has remained the most cautious. Historically, the Fed, along with the OCC and FDIC from the Treasury Department, has limited crypto companies' access to banking services. Even after political changes, the Fed has maintained a wary attitude towards cryptocurrencies.
Fed Chair Powell previously stated that Congress should advance a "broader regulatory framework around cryptocurrencies" to address potential risks of stablecoins. This cautious stance contrasts sharply with the open attitude of other regulatory agencies. Although the Fed has recently relaxed some restrictions, the overall regulatory environment remains unclear.
In April, the Federal Reserve Board announced that it would revoke previous guidance on bank crypto asset and dollar token activities, and adjust related expectations to ensure consistency with evolving risks while further supporting banking system innovation. Specific measures include revoking the 2022 supervisory letter, no longer requiring state member banks to provide advance notice of crypto asset activities, and instead monitoring through routine regulatory processes; revoking the 2023 letter on the non-objection process for state member banks engaging in dollar token activities; and jointly with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, revoking two joint statements issued by federal bank regulators in 2023 regarding bank crypto asset activities and risk exposures.
Michelle Bowman has previously stated multiple times in public that regulation should not be a reason for "shutting the door" on banking services. She believes that regulatory bodies should not use rules to exclude legitimate businesses from financial services, especially not to serve unrelated policy objectives. These remarks directly address the crypto industry's long-standing dissatisfaction with "de-banking".
During the confirmation hearing, Michelle promised to promote a safe and stable banking system through a pragmatic regulatory approach, establishing a transparent and tailored banking supervision framework to encourage innovation. Such pragmatic and innovation-encouraging language was uncommon under the previous strict regulatory style of Michael Barr. Based on her current statements, her evidence-based regulatory approach is expected to improve crypto companies' bank access and introduce balanced regulation for stablecoins, which contrasts with the Federal Reserve's previous cautious stance.
Policy Transformation at a Critical Juncture
From the overall policy orientation of the Trump administration, Michelle's appointment is just part of a crypto-friendly policy. The Senate Agriculture Committee plans to consider Trump's nomination of Brian Quintenz as the Commodity Futures Trading Commission chairman on June 10.
However, regulatory policy changes still require time and consideration of congressional and other regulatory agencies' attitudes. US stablecoin regulation is currently overseen by multiple agencies, causing confusion and complexity. The GENIUS Act attempts to establish a federal framework while allowing state regulatory regulations to continue. Republicans aim to limit the Federal Reserve's jurisdiction over stablecoin issuers, while Democrats advocate for broader regulation, including oversight of non-bank issuers. This inconsistency highlights the urgent need for a unified regulatory approach, and Bowman may play a crucial role in this fragmented regulatory environment, determining how the Federal Reserve effectively interacts with and guides the stablecoin market.
Overall, Michelle Bowman's appointment may indeed cause some loosening in the Federal Reserve, the last hawkish bastion. In an already crypto-friendly US environment, a change in the Federal Reserve's attitude could eliminate the final obstacles to industry development. However, the specific policy effects remain to be observed through her actual performance. The industry is gradually emerging from the shadow of black swan events and moving towards a new stage. Please be sure to fully read and understand all risk factors before making investment decisions.
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