Vice Chair of the Federal Reserve Michael Barr wants to see the Federal Reserve have a significant role as regulator of stablecoins. “Private money that’s linked to the dollar basically borrows the trust of the Federal Reserve in its issuance,” said Barr, talking during the DC Fintech Week.
The Vice Chair noted that stablecoins linked to the US dollar are private money. “Private money needs to be well regulated. Private money, we’ve seen many examples throughout history can cause significant risks in the financial system,” he said.
“We think there’s very strong interest in having strong federal regulation of stablecoins that make sure that the Federal Reserve can approve stablecoin issuers, can regulate stablecoin issuers, can enforce against stablecoin issuers,” said Governor Barr. “And the set of protections around that including how you deal with wallets and making sure they’re safe and sound. All of that, I think we need a strong Federal framework for and we don’t have one of those yet.”
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