The new director's policy orientation in bank access and stablecoin regulation will directly affect whether crypto companies can obtain basic banking services.
Written by: ChandlerZ, Foresight News
Recently, the U.S. Senate passed the nomination of Michelle Bowman as the Vice Chair of Supervision at the Federal Reserve with 48 votes in favor and 46 against. This Republican from Kansas will replace Michael Barr and take on the highest position in the Fed's regulatory field, directly responsible for regulating 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 U.S. 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. 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 Homeland Security Secretary, Tom Ridge.
After working in the federal government, Bowman went to London to establish and manage a government and public affairs consulting firm. She returned home in 2010 and joined Farmers & Drovers Bank in Kansas, serving 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 regulating 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 importance of avoiding using banking 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 considered one of the key figures who may shift the Fed's stance.
She has repeatedly 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 monetary policy and regulatory responsibilities. Upon taking office, Michelle will have direct influence on crypto business access and stablecoin regulation. She 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 areas of banking supervision.
Potential Shift in Regulatory Attitude
Against the backdrop of an overall warming crypto regulatory environment in the U.S., the Federal Reserve has remained the most cautious. Historically, the Fed, along with the OCC and FDIC, 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 stablecoin risks. This cautious stance contrasts sharply with the open attitudes 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 withdraw previous guidance on bank crypto asset and dollar token activities, adjusting related expectations to ensure consistency with changing 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 regular regulatory processes; withdrawing the 2023 letter on the non-objection process for state member banks' dollar token activities; and jointly revoking two statements with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency regarding bank crypto asset activities and risk exposure.
Michelle Bowman has repeatedly stated in public that regulation should not be a reason for "closing 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 frustration with "de-banking".
In her confirmation hearing, Michelle promised to promote a safe and sound banking system through a pragmatic regulatory approach, establishing a transparent and tailored banking regulatory framework to encourage innovation. Such pragmatic and innovation-encouraging language was uncommon under her predecessor Michael Barr's strict regulatory style. Based on her current statements, her evidence-based regulatory approach is expected to improve crypto companies' bank access and introduce balanced regulation for stablecoins, contrasting with the Fed's previous cautious stance.
Policy Transformation at a Critical Juncture
From the overall policy direction of the Trump administration, Michelle's appointment is just part of a crypto-friendly policy. The Senate Agriculture Committee plans to consider Brian Quintenz's nomination as CFTC Chair on June 10.
However, regulatory policy changes still require time and consideration of congressional and other regulatory attitudes. U.S. 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 laws to continue. Republicans aim to limit the Fed'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 divided regulatory environment, determining how the Fed 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 stronghold. In an already crypto-friendly U.S. environment, a change in the Fed's attitude could remove the final obstacle to industry development. However, the specific policy effects remain to be seen through her actual performance.
