Fed Reserve Official Michael Barr Calls for Stablecoin Regulation
US regulators are finally discussing the subject of fiat-backed digital assets, popularly known as stablecoins.
According to Federal Reserve Vice Chair for Supervision Michael Barr, it’s imperative that stablecoins also fall under the supervisory oversight of the government.
Presenting his idea at a Washington DC-hosted conference, Barr stated unequivocally that the ability of a stablecoin to be pegged to any government-issued currency makes it private money.
Furthermore, these digitized fiat currencies serve as means of payment and value storage mechanisms, meaning they are borrowing the trust of the central bank.
Barr, who was appointed by President Biden as the Federal Reserve’s top bank cop, has argued that stablecoins must be regulated in light of these strong indicators.
Expanding on his stance, he noted that it is essential for stablecoins to be subject to a proper prudential financial framework to avoid posing risks to financial stability or the integrity of payment systems.
“We also have provided proper guidance to the banks that we supervise on how they should engage with their supervisors when considering use of these products,” Barr added.
Barr’s remarks tie into the growing belief amongst US regulators on the need for a strong handle on the crypto space.
In recent years, calls for appropriate oversight of the fast-growing decentralized economy have echoed through the walls of Washington DC. However, stablecoins have been the least considered.
So far this year, the Feds, which serves as the US equivalent of a central bank, has taken a more cursory look at the potential impact a privately controlled digitized sovereign currency could have on the economy.
To that end, the Federal Reserve launched a new set of
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