Fed Chair Jerome Powell appeared before the Senate Committee on Banking, Housing, and Urban Affairs.

Speaking before the Senate Committee on Banking, Housing, and Urban Affairs, Federal Reserve Chairman Jerome Powell acknowledged the potential of blockchain technology for practical applications in the real world and said that the central bank doesn’t want to stifle crypto innovation, but warned of the industry’s fraud and risks.

“We have to be open to the idea that – somewhere in there – there is technology that can be featured in productive innovation that makes people’s lives better,” he said, confirming that the Fed had been “quite active” in the crypto space. “We don’t want regulation to stifle innovation in a way that just favors incumbents and that kind of thing.” (Cryptonews)

“But, like everyone else, we’re watching what’s been happening in the crypto space and what we see is quite a lot of turmoil, we see fraud, we see a lack of transparency, we see run risk.”

He further commented that banks and financial institutions needed to step warily in the crypto area, and that the Fed had issued several joint notices with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), warning banks and institutions of potential pitfalls and risks with cryptocurrencies.

Powell also welcomed the possibility of Congress stepping in with a new legal framework for crypto.

Meanwhile, American regulators have been cracking down on the crypto industry, and the troubles faced by crypto-friendly bank Silvergate (NYSE: SI) could be of concern to the traditional finance industry as the said bank has received significant loans from the Federal Home Loan Banks.

Last week, Silvergate said it would delay the filing of its annual 10-K form due to various audit queries.

It also admitted that it was facing bank regulator inquiries, a U.S. Department of Justice investigation, and congressional scrutiny.

There were also concerns about its ability to continue as a “going concern” over the next year.

Related Story: Key Crypto Players Sever Links With Silvergate Capital

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