U.S. Federal Reserve's Barr Holds Line on Central Bank Needing Stablecoin Powers
Vice Chairman Michael Barr argued that the Fed needs regulatory and enforcement authority over stablecoin issuers – a point of contention in the debate over legislation.
Updated Nov 7, 2023, 4:59 p.m. Published Nov 7, 2023, 3:32 p.m.
The U.S. Federal Reserve needs to regulate and enforce the law against stablecoin issuers, said Federal Reserve Vice Chairman for Supervision Michael Barr, making the federal-oversight argument that has been the major sticking point as the U.S. House of Representatives debates legislation.
Republican lawmakers have leaned into a state-oversight route for companies issuing stablecoins – the steady tokens whose value is pegged to a less volatile asset such as the dollar – and Democrats have favored a dominant role for the Fed. Barr is decidedly in the latter camp.
"We need a strong federal framework," he said Tuesday at the DC Fintech Week event in Washington. "They're creating a form of private money, and private money needs to be well-regulated."
Lawmakers have moved a stablecoin bill through the House Financial Services Committee, winning some support from a handful of Democrats on that panel. The regulatory effort would still need to pass a floor vote in the House, though possibly attached to another must-pass spending bill. Then it needs Senate approval, which has so far been harder to come by.
Barr also addressed the idea of a central bank digital currency (CBDC) in the U.S., saying the Fed is still entirely in the research phase.
"We haven't made a decision on whether it would be a good idea," he said. And he repeated the recent promises from the central bank that it won't move on a digital dollar unless the White House and Congress "clearly authorize" establishing such a thing.
Read more: U.S. Banking Watchdog Hsu Says Tokenization Promising, But Crypto Full of Fraud
Jesse Hamilton
Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.
