Fed Michelle Bowman Urges Regulators to Embrace Crypto, AI — Not Just Caution

At the Wyoming Blockchain Symposium, Federal Reserve Governor Michelle Bowman called for a dramatic shift in regulatory posture—arguing that banks and regulators must proactively engage with crypto, blockchain, AI, and tokenization or risk being left behind.

During her address at the Wyoming Blockchain Symposium on August 19, 2025, Federal Reserve Vice Chair for Supervision Michelle Bowman urged regulators to shed their “overly cautious mindset” and embrace emerging technologies like cryptocurrency, blockchain, AI, and tokenization. She argued that innovation should be guided—not blocked—by regulation.

Bowman emphasized that phone rails and financial systems must evolve: “The choice is clear—we either help build a stable, efficient framework or risk watching new tech bypass traditional banking entirely.” She cited the passage of the GENIUS Act, establishing a stablecoin regulatory framework, as a crucial step to integrate digital currencies into financial infrastructure.

Reflecting on blockchain’s potential, Bowman discussed tools like tokenization and AI’s role in fraud detection, stating that they can meaningfully enhance speed, efficiency, and customer experience.In an innovative approach to regulatory learning, she even suggested allowing Fed staff to hold de minimis amounts of cryptocurrency—comparing it to learning how to ski by actually getting on the slopes.

In a landmark policy shift, Bowman announced that the Fed will no longer penalize banks for engaging with legal businesses on the basis of “reputational risk”—a barrier that had discouraged collaboration with digital asset sectors. She concluded with a warning that resistance to change could render the banking system increasingly irrelevant.

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