Fed official Bowman proposed allowing employees to hold crypto assets, calling for a cultural shift in regulation to embrace blockchain technology.

Michelle Bowman, the Vice Chair responsible for financial regulation on the Federal Reserve Board of Governors, publicly proposed that Fed employees should be allowed to hold small amounts of crypto assets, believing that firsthand experience would improve regulatory capabilities and help attract talent. She also urged financial regulatory agencies to abandon an "overly cautious mindset" towards new technologies and actively embrace the changes brought by artificial intelligence and blockchain; otherwise, the traditional banking system faces the risk of being marginalized. This move is seen as a rare signal that the Fed's internal attitude towards digital money may be softening.

Bowman proposes to relax the ban to inject practical awareness into regulation

Currently, the internal rules of the Fed prohibit its employees from holding Crypto Assets, but this situation may soon change. At a Blockchain seminar in Wyoming, Fed Vice Chair Bowman suggested that allowing central bank staff to hold "de minimis" Crypto Assets would bring significant benefits.

• Enhancing Regulatory Standards: Bowman emphasized that direct contact with and use of digital assets can provide valuable insights for examiners responsible for overseeing banks and related financial institutions' crypto activities. "There is no substitute for experimenting and understanding how ownership and transfer processes work," she added with a vivid metaphor, "I certainly wouldn't trust someone who has never been skiing to teach me how to ski, no matter how many books and articles he has read or written about skiing."
• Attracting and Retaining Talent: Bowman pointed out that many central bank bank examiners come from the private sector, where knowledge of digital assets is becoming increasingly valued. Existing bans may reduce the attractiveness of public sector positions for experts in the fintech field. Allowing coin holding helps the Fed maintain an edge in the competition for talent. Baumann did not specify how much or what types of crypto assets the revised policy would allow.

Call for a Cultural Shift in Regulation, Abandoning the "Overly Cautious" Mindset

In addition to the coin proposal, Bowman more broadly urged regulators to move away from what she described as an "overly cautious mindset" towards new technologies such as artificial intelligence and blockchain.

• Clear Choice: She pointed out that regulators face a clear path: "We must choose to embrace change and help build a reliable and lasting framework - ensuring safety and robustness while balancing the benefits of efficiency and speed - or remain stagnant, allowing new technologies to completely bypass the traditional banking system."
• Weighing Risks and Rewards: Bowman acknowledges that technological change comes with specific risks, but she believes that "when we recognize and consider the potential broad benefits of new technologies, the risks may be offset, or at least identified as manageable."
• Reduce the use of "reputational risk" as a regulatory tool: Bowman also stated that he would seek to limit the use of "reputational risk" as a regulatory measure, pointing out that the Fed and other agencies have committed to stop weighing this factor in regulatory reviews. Critics (including some lawmakers and banking groups) argue that reputational risk is too subjective and is used to unfairly restrict legitimate businesses.

Encourage industry collaboration, heralding the arrival of change

Baumann encourages the banking industry to engage directly with regulators and share expertise on blockchain and digital assets. "I am committed to changing our culture and attitude towards adopting and integrating technology and new products and services," she stated firmly. Finally, she issued a clear warning: "Change is coming. If we do not take this approach, we will face the risk of the banking system becoming less relevant to consumers, businesses, and the overall economy."

Conclusion

The proposal by Fed Vice Chair Bowman marks a shift in high-level regulators' perception of Crypto Assets from theoretical examination to practical understanding. The core logic is that effective regulation must be based on personal experience rather than observing from a distance. This is not only about talent strategy but also a cultural transformation aimed at preventing the traditional financial system from falling behind in the technological wave. If this proposal is adopted, it will set an important precedent for the interaction between central banks and the crypto ecosystem, and may influence the policy direction of other global regulators. Although the specific details have yet to be finalized, the warning that "change is coming" has already been clearly issued.