Federal Reserve Vice Chair Michael Barr has reiterated the government’s opinion that private crypto stablecoins pose a financial risk. Indeed, the official told Bloomberg that these tokens can have “destabilizing effects on finance if left unchecked.” Subsequently, he discussed the need for clear regulation.
The United States has sought digital asset regulation since the sudden and devastating collapse of FTX . Now, the Federal Reserve is making its opinion known regarding the regulatory necessity of the presence of stablecoins. Yet, they have previously discussed the digital asset as a viable form of money.
“There is interest in strong, federal regulation of stablecoins that makes sure the Federal Reserve can approve, regulate, and enforce against stablecoin issuers, including wallets,” Barr stated. “We need a strong framework; it’s better if Congress can decide the rules of the road.”
Additionally, Barr discussed the Fed’s study of digital currencies that could be backed by the Central Bank. The implementation of Central Bank Digital Currencies (CBDC) has certainly been met with concern from citizens. However, the Fed is moving forward with plans that are approved by Congress and the government’s executive branch.
The Federal Reserve is reiterating the potential financial risk of private crypto stablecoins and the need for clear regulation. This is further evidence of the US government’s commitment to regulating digital assets. It could lead to greater industry oversight and a more secure digital asset environment.
You can read more about this topic here: Watcher Guru: Federal Reserve Official Says Stablecoins Pose Financial Risk