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United States Federal Reserve setting up a “specialized team of experts” to supervise the crypto sector

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Indrani bose Follow

INDIA

Mar, 13 2023

Mar, 13 2023

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Due to the central bank's concerns over "unregulated" stablecoins, the United States Federal Reserve has announced plans to establish a “specialized team of experts” to monitor the cryptocurrency industry's progress.

 

While Vice Chair for Supervision Michael Barr acknowledged that cryptocurrencies may have a transformative effect on the financial system, he cautioned that "the benefits of innovation can only be realized if appropriate guardrails are in place."

 

Recently a presentation took place at the Peterson Institute for International Economics. Vice Chair for Supervision Michael Barr said in that event that crypto may transform the financial system. He further added that it is only through appropriate guardrails that innovation can be maximized. The new crypto team will help the Federal Reserve learn from new developments and stay on top of innovation in this sector," according to Barr.

 

To avoid excessive regulation that "stifles innovation" and under the regulation that allows households and the financial system to suffer substantial harm," Barr said, regulation needs to be a "deliberative process.

 

Barr singled out stablecoins as a potentially problematic area of cryptocurrency. He worries that consumers, businesses, and the economy as a whole could be at risk if stablecoins were widely adopted without oversight from the Federal Reserve.

 

Custodia Bank has been repeatedly refused membership in the Federal Reserve System.


The CEO of Custodia Bank, Caitlin Long mentioned Silicon Valley Bank, whose stock dropped following an update on the bank's financial condition on March 8 revealed that it had sold $21 billion in equities at a $1.8 billion loss, fueling speculation that the sale had been pushed in order to raise cash.

 

Along with other regulatory authorities including the FDIC and the Office of the Comptroller of the Currency, the Fed has been issuing guidelines and policy pronouncements about digital assets in the United States in recent months. According to Barr, such claims will continue to be made.

 

In response to a question about whether the Fed should have been alerted to crypto concentration problems at some banks before those banks issued open warnings, Barr said that his agency tends to give small banks more leeway than larger ones.


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Indrani bose

CBW - External Analyst

INDIA

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