By ChandlerZ, Foresight News
Original title: The Federal Reserve welcomes a new regulatory chief, is the last hawkish bastion about to loosen?
Recently, the U.S. Senate approved Michelle Bowman's nomination as the Federal Reserve's vice chairman for supervision with 48 votes in favor and 46 votes against. The Republican from Kansas will succeed Michael Barr as the highest position in the Federal Reserve's regulatory field, and will be directly responsible for the supervision of stablecoin issuers and crypto-related institutions in the future.
Michelle Bowman: From Director to Head of Regulation
Michelle Bowman was born and raised in Kansas. She holds a bachelor's degree in advertising and journalism from the University of Kansas and a doctorate in law from Washburn University School of Law. She is a registered attorney in New York State. In her early years, she served in various positions in the U.S. Congress, including in the office of Senator Bob Dole, and as a legal counselor to the House Transportation and Infrastructure Committee and the Government Reform and Oversight Committee. Since 2002, she has entered the federal government administration system as the director of congressional and government affairs for the Federal Emergency Management Agency (FEMA), and later served as deputy assistant secretary and policy advisor to the Department of Homeland Security, providing policy support to the first Secretary of Homeland Security, Tom Ridge.
After working for the federal government, Bowman moved to London to start and run a government and public affairs consulting firm before returning home in 2010 to join Farmers & Drovers Bank in Kansas, where she served as vice president for seven years and gained a deep understanding of the realities of community banking. In 2017, she was appointed Kansas Banking Commissioner, responsible for regulating banking institutions across the state, and in 2018 she joined the Federal Reserve Board of Governors.
During her tenure at the Fed, Bowman was known for her focus on small and medium-sized banks and her emphasis on the balance between regulation and innovation. She has repeatedly publicly stressed that banking regulatory tools should not be used to achieve policy goals unrelated to finance, and called for maintaining the sound operation of the banking system while encouraging innovation. As vice chairman of supervision, she will lead the access and regulatory policies for stablecoins, crypto assets, and fintech companies, and is seen as one of the key figures in the Fed's possible shift in position.
She has repeatedly questioned central bank digital currencies (CBDCs) and warned of the risks that stablecoins could pose in the absence of clear rules. At the April hearing, Michelle did not clearly state her policy preferences on crypto assets.
The position of Vice Chairman for Supervision of the Federal Reserve was established after the 2008 financial crisis in order to separate the monetary policy and regulatory responsibilities of the Federal Reserve. After taking office, Michelle will have direct influence on the access to crypto businesses and the regulation of stablecoins. He also said recently that the Federal Reserve will re-formulate regulatory rules for the largest and most complex banks in the country, revealing that the Federal Reserve will soon launch a number of projects aimed at relaxing requirements and simplifying supervision, involving a number of regulatory areas that have long been criticized by the banking industry.
Or promote a change in regulatory attitude
In the context of the overall warming of the US crypto regulatory environment, the Federal Reserve has always been the most cautious one. Historically, the Federal Reserve, together with the Treasury Department's OCC and FDIC, has restricted crypto companies' access to banking services. Even after the political environment has changed, the Federal Reserve remains wary of cryptocurrencies.
Federal Reserve Chairman Powell has previously said that Congress should advance a "larger regulatory framework around cryptocurrencies" to address the potential risks of stablecoins. This cautious stance contrasts with the openness of other regulators. Although the Fed has recently relaxed some restrictions, the overall regulatory environment remains unclear.
In April, the Federal Reserve Committee issued an announcement stating that it would revoke its previous guidance on bank crypto assets and dollar token activities and adjust related expectations to ensure consistency with changing risks while further supporting innovation in the banking system. Specific measures include revoking the 2022 regulatory letter, no longer requiring state member banks to notify crypto asset activities in advance, and instead monitoring through regular regulatory processes; revoking the 2023 letter on the non-objection process for state member banks to engage in dollar token activities; and jointly with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, revoking two joint statements issued by federal banking regulators in 2023 on bank crypto asset activities and risk exposure.
Michelle Bowman has said publicly many times in the past that regulation should not be a reason for the "closure" of banking services. She believes that regulators should not use rules to exclude legitimate businesses from obtaining financial services, especially not to serve irrelevant policy goals. This remark just responds to the long-standing dissatisfaction of the crypto industry with "de-banking".
At the confirmation hearing, Michelle promised to promote a safe and sound banking system through a pragmatic regulatory approach and to establish a transparent and tailored banking regulatory framework to encourage innovation. This pragmatic and innovative statement was not common under the strict regulatory style of her predecessor, Michael Barr. From the current statement, her evidence-based regulatory approach is expected to improve banking access for crypto companies and introduce balanced regulation for stablecoins, which contrasts with the Fed's previous cautious stance.
Policy change is at a critical stage
From the perspective of the Trump administration's overall policy orientation, Michelle's appointment is just part of the crypto-friendly policy. The Senate Agriculture Committee plans to consider Trump's nomination of Brian Quintenz as chairman of the Commodity Futures Trading Commission on June 10.
But changes in regulatory policies still take time and also take into account the attitudes of Congress and other regulators. U.S. stablecoin regulation is currently governed by multiple agencies, causing confusion and complexity. The GENIUS Act attempts to establish a federal framework while allowing state regulations to continue. Republican efforts aim to limit the Fed's jurisdiction over stablecoin issuers, while Democrats advocate for broader regulation, including over non-bank issuers. This inconsistency highlights the urgent need for a unified regulatory approach, and Bowman may play a key role in this divided regulatory environment, determining how the Fed can effectively interact with and guide the stablecoin market.
In general, the appointment of Michelle Bowman may indeed loosen the Fed's last hawkish bastion. In the case that the overall crypto environment in the United States is already quite friendly, the Fed's change of attitude may remove the last obstacle to the development of the industry. However, the specific policy effect still needs to be observed in her actual work performance.
