Michelle Bowman of Fed advocates balanced oversight as blockchain and AI gain
At the 2025 Wyoming Blockchain Symposium, Federal Reserve Vice Chair for Supervision Michelle Bowman urged regulators and industry leaders to actively embrace innovation while safeguarding financial stability. She stressed that the United States is “at a crossroads” in shaping its approach to digital assets and emerging technologies.
In her speech, Bowman highlighted that blockchain, tokenization, artificial intelligence, and even quantum computing have the potential to fundamentally transform financial services. These tools, she said, could eliminate inefficiencies in asset transfers, reduce transaction costs, and broaden access to capital markets. She gave particular attention to tokenization as a solution to long-standing challenges in ownership transfers, where slow manual processes could be replaced by streamlined digital systems.
“Every major historical shift — industrialization, communications, the internet — brought profound change. Blockchain and AI may prove equally significant,” Bowman stated.
From caution to competitiveness
While acknowledging regulators’ tendency to focus on risks, Bowman emphasized that excessive caution could undermine U.S. competitiveness. She noted that banks are already testing digital asset custody services and deploying tokenization to improve efficiency, with demand growing across institutions of all sizes.
She also pointed to the passage of the GENIUS Act, which tasked banking agencies with developing a regulatory framework for stablecoins, as proof that digital assets are becoming integrated into the financial system. Stablecoins, Bowman argued, could eventually disrupt traditional payment infrastructure.
Building an adaptive oversight model
Bowman underlined that the Federal Reserve is working toward a regulatory model that combines risk management with space for innovation. She outlined four key principles: regulatory certainty, proportionality, adherence to consumer protection standards, and maintaining U.S. leadership as a hub for innovation.
“We cannot adopt a one-size-fits-all approach,” Bowman said, urging regulators to consider the unique features of new financial technologies rather than applying outdated rules.
She further revealed that reputational risk will no longer be considered in supervisory reviews. This change, she noted, ensures a level playing field for banks working with lawful businesses, including digital asset firms.
Toward constructive engagement
Bowman called for collaboration among regulators, banks, and developers to better understand new technologies, particularly their potential role in combating fraud. She even suggested that Federal Reserve staff could benefit from holding small amounts of digital assets to gain practical experience.
“Innovation and regulation do not need to stand on opposite sides,” Bowman concluded. “Together, they can create a safer, stronger, and more efficient financial system.”
Read also: SEC delays key crypto ETF decisions until October
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