Michael Barr, the head of the Federal Reserve’s bank watchdog, says he is “deeply concerned” about stablecoins in the absence of robust federal regulation.
Stablecoins are cryptocurrency tokens anchored to assets like the US dollar. Fed officials have previously indicated their unease about these tokens.
The regulator has given banks under its control advice regarding cryptocurrency-related activities. However, according to Barr, the Fed’s vice chair for supervision, there are significant concerns when the organisation lacks direct regulatory and supervisory authority.
Barr said in prepared remarks for a fintech conference at the Federal Reserve Bank of Philadelphia on Friday that non-federally regulated stablecoins “could pose significant risks to financial stability, monetary policy, and the US payments system if they were to become a widely used form of payment and store of value.”
The Fed has started a programme known as “novel activities supervision” to assist the organisation in monitoring lenders’ involvement in digital assets as well as their collaborations with fintech firms.