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Fed Chair Expects Crypto Banking Rules to Ease, But No Rate Cuts In May

2 mins
Updated by Mohammad Shahid
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In Brief

  • Fed Chair Powell ruled out a near-term rate cut, citing economic uncertainty and risks from trade policy.
  • He stated that crypto banking regulations will be partially relaxed, reflecting growing adoption and policy shifts.
  • While stocks dipped on the news, crypto markets remained stable, supported by positive regulatory signals.
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Federal Reserve Chair Jerome Powell signaled on Tuesday that crypto banking regulations will be partially relaxed. He also made it seemingly clear that a near-term interest rate cut remains unlikely. 

Speaking at the Economic Club of Chicago, Powell addressed mounting uncertainty stemming from trade policy and reinforced the central bank’s cautious stance.

Fed’s Powell Maitains a Hawkish Outlook

Powell’s remarks come as market expectations for a May rate cut have collapsed, with CME FedWatch data pricing in just a 16% chance. US equities dipped modestly following the speech. The equity market currently reflects investor disappointment over the lack of dovish signals.

“We should not rush to lower interest rates,” Powell said. “We have every reason to wait for more clarity before considering any changes to Fed policy.”

The crypto market, however, remained relatively steady. Rate cut optimism had already been priced out after last week’s hawkish FOMC minutes and cooler-than-expected CPI print.

Fed's Interest Rate Cut Probability for May
Fed’s Interest Rate Cut Probability for May. Source: CME FedWatch

Powell also offered direct comments on digital assets.

“Cryptocurrency is becoming more popular. A legal framework for stablecoins is a good idea.”

He added that the Federal Reserve supports relaxing certain banking regulations on crypto. The Feds agree that the sector is maturing and requires more defined oversight rather than constraint.

The dual message—no imminent policy easing but a positive outlook for crypto regulation—was met with a muted response across digital asset markets. 

Bitcoin hovered near $84,500, showing resilience despite risk-off sentiment in equities. Powell acknowledged that economic growth had likely slowed at the start of 2025 and warned that Trump’s tariffs are a “key source of uncertainty.” 

He also noted the Fed is not close to ending quantitative tightening and may need to make difficult policy choices if inflation resurges.

While the Fed reaffirmed its readiness to provide dollar liquidity to global central banks if needed, Powell dismissed the idea of a Fed “put.” He said the central bank’s independence is “a matter of law.”

For crypto markets, the regulatory tone was a silver lining in an otherwise hawkish macro environment.

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Mohammad Shahid
Mohammad Shahid is an experienced crypto journalist with a specialization in blockchain security. He covers a wide range of topics spanning everything from Web3 to retail crypto. As an experienced freelance journalist, he has worked on campaigns for several tier-1 exchanges, such as Bitget, and startups, including RankFi and HAQQ. Mohammad comes from an extensive technical background, with a master’s degree in Cyber Security Analysis from Macquarie University, where he majored in...
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