Michael Saylor: US Banks “Can Start Supporting Bitcoin (BTC)”

The Federal Reserve (Fed) has rescinded its previous guidance discouraging banks from participating in cryptocurrencies, which could significantly boost the adoption of Bitcoin (BTC) by U.S. financial institutions.

On April 24, the Fed withdrew its 2022 regulatory letter, which had previously aimed to prevent banks from participating in cryptocurrency and stablecoin-related activities. The decision has led to a significant rebound in Bitcoin investor sentiment.

The 2022 guidance initially warned that cryptocurrencies could pose risks to investors and the stability of the U.S. financial system.

Michael Saylor, co-founder of Strategy, the world's largest corporate Bitcoin holder, said in an April 25 X-platform post that the Fed's move means "banks can now start supporting Bitcoin."

Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, said the Fed's decision "is an important development as it will simplify the path for institutions to adopt cryptocurrencies."

"Withdrawing this specific guidance ensures that crypto assets will be supervised through the standard regulatory process," Plotnikova said in an interview. "We still need to pass the GENIUS and STABLE Acts to further coordinate cryptocurrency activities for businesses and other market participants under the supervision of the Federal Reserve. The combination of these legislative efforts will be the main driving force for institutional adoption."

On April 2, the Stablecoin Transparency and Accountability for a Better Ledger Economy Act (STABLE Act) was passed by the U.S. House of Representatives Financial Services Committee with 32 votes in favor and 17 votes against. The bill aims to establish clear regulatory guidance for U.S. dollar stablecoins.

On March 13, the GENIUS Act, full name "Guiding and Establishing a National Innovation Act for Stablecoins in the United States", was passed by the Senate Banking Committee with 18 votes in favor and 6 votes against.

The Fed's shift marks the end of regulatory hostility

Eneko Knörr, co-founder and CEO of the yield-based stablecoin project Stabolut, said that the Fed's decision could be an "important turning point" for the adoption of Bitcoin by U.S. institutions.

"Until now, regulatory hostility in the U.S. has made it nearly impossible for traditional financial institutions to participate in this space," said Knörr, adding that the door has finally opened with the recent shift in guidance from the Federal Reserve. This presents a huge opportunity for banks - a space that has previously been dominated by crypto-native companies such as Coinbase.

Knörr also said that banks may now move quickly to meet customer demand and retain market share previously occupied by crypto-native companies such as Coinbase.

Despite rising investor demand and greater regulatory clarity in the region, Bitcoin adoption by European financial institutions is still lagging, with less than 20% of European banks offering cryptocurrency services.