Vice Chair for Supervision at Federal Reserve in his first address after assuming office, Michael S. Barr asserted that cryptocurrency activity requires the same level of regulation as regular bank operations.
At the Hutchins Center on Fiscal & Monetary Policy at the Brookings Institution on September 7 at 2:00 PM EDT, Michael S. Barr, who assumed his position as the Federal Reserve Board’s vice chair for supervision on July 19, discussed ways to make the financial system more secure and equitable.
Federal Reserve to work with banks for Crypto regulation
In his statements, Barr said the U.S. Central bank will cooperate with other bank authorities to regulate any cryptocurrency activities that banks engage in.
According to him, banks involved in cryptocurrency-related operations must have the proper safeguards in place to manage the novel risks involved with such activities and to guarantee compliance with all applicable regulations, particularly those pertaining to money laundering.
Additionally, he discussed stablecoin governance, said that cryptocurrencies have yet to fully realise their promise to increase financial inclusion, and indicated that the Fed doesn’t now have a pressing need to issue a digital currency.
“As we have seen with the growth of crypto assets in a rapidly rising and volatile market, participants may come to believe that they understand new products only to learn that they don’t, and then suffer significant losses,” he asserts.
Therefore, he contends Congress must pass that urgent legislation to include stablecoins, particularly those intended to be used as payment methods, under the prudential regulatory framework.
Fairness and safety as a priority
In accordance with the tenet of the same risk, same action, and same regulation, independent of the technology used for the activity, he claims they would like to engage with other bank regulatory bodies to guarantee that they properly control cryptocurrency activity inside banks.
Barr said. “I plan to make sure that the crypto activity of banks that we supervise is subject to the necessary safeguards that protect the safety of the banking system as well as bank customers.”
Barr stated that he will dedicate himself to improving the financial system’s fairness in addition to its safety. Also, he will use the instruments of regulation, supervision, and enforcement to ensure that businesses and households have access to the services they require, the information they need to make informed financial decisions, and protection from unfair treatment.
Fairness is fundamental to financial oversight, according to him.