The United States Federal Reserve is about to create a “specialized team of experts” to follow the evolution of the cryptocurrency sectoraccording to a Fed official, amid central bank concerns over “unregulated” stablecoins.
In a speech delivered March 9 at the Peterson Institute for International Economics in Washington, Vice Chairman of Supervision Michael Barr admitted that cryptocurrencies could have a “transformational effect” on the financial system, but added that “the benefits of innovation can only be realized if the right safeguards are in place.”.
According to B.arr, the new cryptocurrency team will help the Federal Reserve “learn from new developments and make sure we stay up to date on innovation in this sector”. And he added:
“Innovation always comes fast, but it takes time for consumers to realize that they could both make and lose money with new financial products.”
For his part, Barr noted that regulation must be a “deliberative process” to ensure that a balance is struck between over-regulation that “will stifle innovation” and under-regulation that “will allow substantial damage to households and the financial system”.
One sub-sector of cryptocurrency that Barr highlighted as a point of concern was stablecoins..
Said the assets that back many stablecoins in circulation are illiquid, meaning they can be difficult to liquidate for cash when necessaryarguing:
“This mismatch between value and liquidity is the recipe for a classic bank run.”
In your opinion, Unless regulated by the Federal Reserve, any widespread adoption of stablecoins could put households, businesses, and the broader economy at risk.
Caitlin Long, CEO of Custodia Bank – which has been consistently rejected from entering the Federal Reserve System – noted the irony of Barr’s comments, given her belief that Silvergate Bank collapsed due to liquidity problems stemming from a run. banking.
UM, WASN’T THE FED #silvergate‘s REGULATOR?♀️
“The banks we regulate, in contrast, are well protected from bank runs through a robust array of supervisory requirements.”–Fed Vice Chair Supervision Michael Barr, speaking this morning(!)
h/t @ByKyleCampbellhttps://t.co/7UsHDKfiaC— Caitlin Long ⚡️ (@CaitlinLong_) March 9, 2023
wasn’t the fed the silvergate regulator?
“The banks we regulate, by contrast, are well protected from bank runs by a robust set of supervisory requirements,” Fed Vice Chairman of Supervision Michael Barr said this morning(!)
h/t @ByKyleCampbell https://t.co/7UsHDKfiaC
Long also pointed to the current problems facing Silicon Valley Bank, whose shares have plunged. after a March 8 financial update revealed he sold $21 billion worth of holdings at a loss of $1.8 billion, raising fears he might be forced to sell to free up capital.
FRIENDLY REMINDER that, right as the panic was happening in Silicon Valley, the Fed’s Vice Chair for Supervision Barr said in a speech: “The banks we regulate, in contrast, are well protected from bank runs through a robust array of supervisory requirements.” https://t.co/FpPl2Qlk7x
— Caitlin Long ⚡️ (@CaitlinLong_) March 10, 2023
KINDLY REMINDER that just as panic was raging in Silicon Valley, Fed Vice Chairman of Supervision Barr said in a speech: “The banks we regulate, by contrast, are well protected from bank runs through a robust set of supervisory requirements. https://t.co/FpPl2Qlk7x
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