Today during a speech at the Philadelphia Federal Reserve, Vice Chair Michael Barr raised the topic of stablecoin regulation. The House recently passed a Bill allowing state regulators to supervise stablecoins. While the legislation still has a long path before passage, clearly the Federal Reserve has concerns.
Currently, the New York Department of Financial Services (NYDFS) oversees all the current major stablecoins that are domiciled in the United States, including USDC, Paypal’s stablecoin, and the Gemini and Paxos stablecoins.
“Stablecoins are a form of money, and the ultimate source of credibility in money is the central bank,” said Barr. “If non-federally regulated stablecoins were to become a widespread means of payment and store of value, they could pose significant risks to financial stability, monetary policy, and the U.S. payments system.”
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