Federal Reserve’s Barr: Stablecoins Need To Be Regulated

It has been just revealed the fact that the Federal Reserve’s Barr said that stablecoins have to be regulated. Check out the latest reports about this below.

During a conference in Washington D.C., Michael Barr, a top official at the Federal Reserve, emphasized the need for regulating stablecoins.

He highlighted that when an asset is both tied to a government-issued currency and serves as a payment method and a store of value, it essentially borrows the trust of the central bank.

“So, the Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payments system integrity,” Barr said.

The central bank has recently increased its focus on stablecoins. In August, it announced new guardrails to strengthen its supervision of banks that are involved in stablecoin activity.

Last month, Barr expressed his deep concern regarding the issuance of stablecoins without strong federal oversight. In Congress, lawmakers have been debating over how stablecoins should be regulated in order to create a federal framework.

Although the House Financial Services Committee made some progress by advancing a stablecoin bill, Rep. Maxine Waters, D-Calif, criticized the bill over a provision that would allow state regulators to approve stablecoin issuance without Federal Reserve input.

According to Politico, Waters has stated that negotiations on the stablecoin bill are expected to resume soon.

The Federal Reserve is still researching the feasibility of central bank digital currencies, but Barr has made it clear that the Federal Reserve will only move forward with the support of the executive branch and authorization from Congress.

The central bank released a report last year examining the potential advantages and disadvantages of a CBDC, but Barr confirmed that no decision has been made yet on whether the central bank will issue a CBDC.

“The research is currently focused on end-to-end system architecture, such as how ledgers that record ownership of and transactions in digital assets are maintained, secured, and verified, as well as tokenization and custody models,” Barr said.