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Tuesday Dec 2 2025 21:00
2 min
During an oversight hearing on Tuesday, Representative Stephen Lynch pressed Federal Reserve Vice Chair Michelle Bowman regarding her earlier remarks encouraging banks to "engage fully" with digital assets. Lynch questioned the Federal Reserve's role in developing cryptocurrency frameworks while expressing confusion about the definition of stablecoins.
Lynch referenced Bowman's comments at the Santander International Banking Conference in November, where he said she supported banks "[engaging] fully" with digital assets. However, Bowman clarified that her remarks at the conference referred to "digital assets" generally, not specifically cryptocurrencies.
The questioning evolved into Lynch probing Bowman about the distinctions between digital assets and stablecoins. The Fed official explained that Congress had authorized the central bank, through the GENIUS Act (legislation designed to regulate payment stablecoins), to explore a regulatory framework for digital assets.
"The GENIUS Act requires us to promulgate regulations to allow these types of activities," Bowman stated. While many cryptocurrencies exhibit price volatility, stablecoins, particularly those pegged to the US dollar, are designed for price stability. Although some stablecoins have experienced depegging events, such as the Terra algorithmic stablecoin collapse in 2022, most stablecoins typically fluctuate within a narrow range (around 1%) of their intended peg.
Bowman had previously suggested in August that Federal Reserve staff should be permitted to hold small "amounts of crypto or other types of digital assets" to better understand the underlying technology.
Also testifying at the Tuesday hearing was Travis Hill, acting chair of the Federal Deposit Insurance Corporation (FDIC). The FDIC is among the government agencies responsible for implementing the GENIUS Act, which was signed into law by former President Donald Trump in July.
Hill indicated that the FDIC plans to propose a stablecoin framework "later this month," which will include requirements for overseeing stablecoin issuers.
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