Jerome Powell on Crypto: Regulation, Risks, and Market Reactions
Whether intentionally or unintentionally, Jerome Powell has consistently had a significant impact on crypto markets. He was even named Forbes Person of the Year in Crypto in 2020, largely due to his expansive monetary policies—especially printing more than $3 trillion to stimulate the US economy during the COVID-19 pandemic—which inadvertently fueled massive rallies in crypto asset prices.
But who exactly is Jerome Powell, what have been his key moments discussing crypto, how have his comments influenced markets, and what can we expect from the Federal Reserve's stance on cryptocurrencies going forward?
Who Is Jerome Powell?
Jerome Powell is the 16th Chair of the US Federal Reserve, appointed in 2018 by President Donald Trump and reappointed in 2022 by President Joe Biden. Unlike many Fed chairs, Powell doesn't come from a traditional economics background. Instead, he holds degrees in politics and law and previously worked as a lawyer, investment banker, and Treasury official.
With this diverse professional background, Powell adopts a pragmatic and cautious approach to financial regulation and monetary policy. His decisions consistently aim to strike a balance between supporting economic growth and containing inflation, although he has faced criticism from both dovish and hawkish perspectives for holding a middle-ground position.
How Does Jerome Powell Influence Financial Markets?
As Federal Reserve Chair, Jerome Powell exerts substantial influence over financial markets through monetary policy decisions, primarily by setting interest rates and managing the money supply. Changes in Fed policy often send ripples through stocks, bonds, and commodities markets.
For instance, during the COVID-19 crisis in March 2020, Powell aggressively cut interest rates to near zero and launched massive quantitative easing (QE) measures. These decisions flooded financial markets with liquidity, prompting sharp rallies across stocks, bonds, and commodities. Technology stocks, in particular, surged dramatically, pushing major indices like the S&P 500 and NASDAQ to record highs by late 2021.
Conversely, Powell's rate hikes beginning in March 2022 to combat rising inflation triggered significant market downturns. Equities experienced high volatility, bonds suffered historic losses, and even traditional safe-haven assets, such as gold and cryptocurrencies, struggled amid tightening financial conditions.
Jerome Powell’s Historical Speeches and Their Impact on Cryptocurrency
Regarding crypto, Jerome Powell has consistently advocated a cautious regulatory approach. He's expressed strong support for stablecoin regulations while simultaneously highlighting concerns about the volatility and speculative nature of cryptocurrencies.
Jerome Powell’s Key Cryptocurrency Moments
Below are five key moments when Jerome Powell publicly discussed cryptocurrency and regulation:
February 11, 2025: In testimony before the Senate Banking Committee, Powell expressed concern about reports of "debanking," where crypto businesses were unfairly denied banking services. He strongly advocated clear stablecoin regulations, emphasising that without proper oversight, stablecoins posed significant financial stability risks. He also stressed the importance of transparent guidelines to safeguard consumers and the broader economy from systemic threats.
December 18, 2024: During a press conference following the Fed's policy meeting, Powell clarified the Federal Reserve's stance on holding Bitcoin. He stated the Fed could not legally hold BTC and had no intention of changing this policy, adding that any modification would require explicit congressional approval.
December 4, 2024: Earlier that month, Powell explicitly compared Bitcoin to gold rather than to the US dollar. He emphasised that Bitcoin functions primarily as a speculative store-of-value asset, suggesting it competes more directly with gold as an inflation hedge rather than as a rival currency to the dollar.
February 14, 2024: In a closed-door meeting, Powell actively pushed House Democrats to develop comprehensive stablecoin legislation. He emphasised the urgent need for clear legislative guidelines to safely integrate these assets into the financial system, reiterating the Fed's position that stablecoins posed potential financial stability risks if left unregulated.
March 7, 2023: In March 2023, Powell highlighted significant cryptocurrency risks, specifically mentioning turmoil, fraud, and liquidity-run vulnerabilities. He underscored digital assets' heightened volatility and insisted on regulators' continuous vigilance to prevent these risks from spilling into broader financial markets.
Beyond Speeches: Powell's Broader Crypto Influence
In addition to directly addressing crypto assets, Jerome Powell's broader remarks on inflation, monetary policy, and financial regulation have also substantially influenced cryptocurrencies like Bitcoin and Ethereum.
One of the clearest examples was the Fed's large-scale stimulus package announced in March 2020 to shield the US economy from pandemic-related impacts. Immediately following Powell's March 15 announcement, crypto markets entered a significant bull run. By the end of 2020, Bitcoin, Ethereum, and the overall cryptocurrency market cap surged dramatically, rising 453%, 512%, and 389%, respectively. Powell's subsequent comments on October 6, 2020, calling for more economic aid, further accelerated this digital asset rally.
Conversely, Powell's statements have also negatively impacted crypto prices. Beyond the Fed's aggressive rate hikes from September 21 to December 14, 2022, Powell's December 18, 2024 clarification that the Fed had no intention of holding Bitcoin disappointed crypto investors. This comment contributed to a 10% decline in BTC's price by December 24, 2024.
Preparing for Powell's Next Moves
Looking ahead, Jerome Powell and the Federal Reserve are expected to continue maintaining a balanced yet cautious approach toward cryptocurrency regulation. Given Powell's consistent emphasis on stablecoin oversight, further regulatory developments in this area are highly likely. His ongoing narrative—that cryptocurrencies primarily serve as speculative assets rather than currencies—will probably persist.
For crypto traders and investors, closely monitoring Powell's statements and testimony will remain crucial. His remarks often directly shape market sentiment, triggering immediate price volatility.
Traders should anticipate heightened market volatility during Powell's public appearances, particularly around Fed rate decisions, congressional testimonies, and financial stability reports. By understanding Powell's nuanced approach—supporting innovation within clearly defined regulatory boundaries—investors can better anticipate market reactions and effectively manage risks going forward.
Risk Disclosure
Trading or investing in crypto assets is risky and may result in the loss of capital as the value may fluctuate. VALR (Pty) Ltd is a licensed financial services provider (FSP #53308).
Disclaimer: Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
