In a recent interview, United States Federal Reserve Vice Chair for Supervision Michael Barr, said the regulatory agency is planning to create a “specialized team of experts” to monitor developments in the cryptocurrency industry amid growing concerns from the central bank about “unregulated” stablecoins.
Following a series of crypto crackdown, the US Fed is gearing up to launch another tactical attack on the digital assets industry. This time the American central bank has hinted on creating a task force to monitor and oversee the developments in the crypto sector that will ensure a balance is reached between over-regulation and under-regulation. In yet another attempt to curb financial freedom, the Federal Reserve is tightening its grip over the decentralized world of cryptocurrencies.
A New Team to Monitor Crypto Developments
As per the interview, Barr revealed that his agency is set to create a specialized team of cryptocurrency experts to “learn from new developments and make sure we’re up to date on innovation in this sector.” He also acknowledged the fact that crypto will usher in a dawn of transformation on the global financial system but added that “the benefits of innovation can only be realized if appropriate guardrails are in place.”
It seems one of his major reasons for concern is stablecoins. Barr said that the assets backing many stablecoins in circulation are “illiquid, meaning that it can be difficult to liquidate them for cash when needed”. The Vice Chair further claimed that unless regulated by the Fed, any widespread adoption of stablecoins could put households, businesses and the broader economy at risk.
Soaring Concerns Regarding Stablecoins
This comes amid growing concerns among lawmakers on how to classify stablecoins. Last month, the US Securities and Exchange Commission (SEC) warned crypto firm Paxos that it plans to sue the company for violating investor protection laws, alleging that its stablecoin, Binance USD (BUSD) is an unregistered security. The collapse of TerraUSD, lasy year, seems to have heated up the discussion on Stablecoins emerging as a major point of contention in the debate over crypto legislation.
Furthermore, the Blockchain Association which comprises of top companies crypto based companies including Kraken, Ripple, Anchorage Digital, and Grayscale has recently sent a letter to the House Financial Services Committee urging that something needs to be done on stablecoins. In a statement, Kristin Smith, CEO of the Blockchain Association stated,
“It’s very clear that this is (Stablecoins) something that Congress needs to legislate.”