A senior U.S. Federal Reserve official has suggested that central bank employees should be allowed to hold small amounts of cryptocurrency to better understand the technology.
Michelle Bowman, the Fed’s Vice Chair for Supervision, made the remarks Tuesday at a blockchain event in Wyoming.
Push for practical experience
Bowman argued that firsthand exposure is crucial for staff tasked with regulating digital assets.
“We will soon be establishing a framework for supervising issuers of these assets,” she said.
“There’s no replacement for experimenting and understanding how that ownership and transfer process flows.”
Currently, Fed staff and their spouses are barred from holding crypto, ETFs tied to digital assets, or shares in crypto-related companies.
That restriction was put in place in 2022 after disclosures revealed unusual trading activity by several top officials during the early COVID-19 market turmoil.
Recruitment and expertise concerns
Bowman warned that strict prohibitions could make it harder for the Fed to attract and retain skilled examiners.
“These restrictions may be a barrier to recruiting and retaining examiners with the necessary expertise,” she said.
Allowing limited holdings, she argued, would help staff develop deeper insights into how digital assets function.
“I certainly wouldn’t trust someone to teach me to ski if they’d never put on skis,” Bowman added.
Call for regulatory flexibility
Bowman used the speech to urge regulators to adopt a more open approach toward emerging technologies.
She said regulators often display an “overly cautious mindset” and risk being left behind if they resist innovation.
“We must choose whether to embrace the change and help shape a framework that will be reliable and durable… or to stand still and allow new technology to bypass the traditional banking system altogether,” Bowman said.
“From a regulator’s perspective, the choice is clear.”
While acknowledging risks, she emphasized that many could be mitigated if regulators recognized the broader benefits of blockchain adoption.
Political backdrop
Bowman’s remarks reflect a broader shift in tone under the Trump administration.
Earlier this month, the Fed announced it would end a special supervision program for banks’ crypto activities, reversing a Biden-era initiative.
President Donald Trump has also directed banking regulators to investigate debanking claims raised by crypto firms and conservative groups.
Bowman did not specify which crypto products or how much exposure she believes staff should be permitted, but her remarks highlight growing recognition inside the Fed of the need for direct experience with digital assets.
