The Federal Reserve — a key regulator of U.S. banking — is about to have a new vice chairman for supervision, Michelle Bowman, who will ultimately guide how the Fed oversees the financial system, possibly including how stablecoin issuers are regulated.
After a tight party-line confirmation vote in the Senate approved the Kansas Republican’s nomination 48-46, Bowman, who has already been serving as one of the Fed board’s governors, will now be elevated to one of its leadership roles. The supervision job was created after the 2008 global financial meltdown and is meant to help focus the central bank’s regulatory role as distinct from its better-known job marshaling U.S. monetary policy.
Banking has been a sore spot for the crypto industry, and the Fed — alongside the two other bank agencies, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. — had taken a highly cautious crypto stance. The sector and its lawmaker allies have blamed the agencies for pressuring the banking system to cut off digital assets businesses and insiders from banking services, jeopardizing the industry’s health, though this changed after Donald Trump became U.S. president again this year. In April, the Fed joined the other regulators in withdrawing earlier constraints on banks’ interactions with the industry.
The Fed’s potential role over stablecoin issuers remains murky as the regulatory legislation is still being debated. Republicans lawmakers have worked hard to sideline the central bank from stablecoin duties, but the latest legislation being considered still foresees the Fed regulating stablecoin issuance in the banks it oversees, plus serving a role in assessing whether foreign regulators are up to snuff to handle issuers outside the U.S.
While Democrats had favored a Fed duty as a watchdog over nonbank issuers, the current legislation being debated on the floor of the Senate puts the OCC in that position.
In her new job, Bowman will serve under Fed Chair Jerome Powell, who has stated in the past that he’d defer to the vice chairman to lead the supervisory agenda. She replaces Democrat predecessor Michael Barr in the position, though he stayed on the board.
Read More: Fed’s Powell Says He’s Also Worried About Debanking That Strained U.S. Crypto