The Federal Reserve Board Vice Chairman for Supervision Michael Barr is currently pushing for stablecoin regulation as he highlighted potential stability risks in the sector.
Federal Reserve Plans to Manage Stablecoin Issuers
Speaking to attendees at the DC Fintech Week event on Tuesday, Barr noted that the Federal Reserve is interested in issuing strong federal regulation for stablecoin. This is aimed at ensuring that the central bank has control (approval, regulation, and enforcement) over the stablecoins offering and its issuers.
This comes amid serious concerns that private entities are essentially creating private stablecoins.
The recent concern of the Fed Reserve about private-industry digital tokens that are pegged to assets like the United States dollar and their capacity to cause some mishaps in the broader financial world necessitated the push for this stablecoin regulation. These crypto assets have had a very high proliferation rate in recent times.
Markedly, the apex U.S. bank realized the need for a strong robust regulatory framework to enforce some level of stability to the stablecoin ecosystem.
According to Barr, the Federal Reserve is actively considering numerous technologies that can support the issuance of a digital currency that is fully backed by the central bank. At the same time, he acknowledged that the Fed Reserve would need to receive authorization from Congress and the executive branch before it can move forward with whatever technology it decides to leverage.
Push for Robust Stablecoin Regulation
Before now, there has been a heated debate on stablecoin regulation as many key players exhibited some form of indecisiveness on the matter. During the first half of this year, there was a congressional hearing which involved the U.S. SEC Chair, Gary Gensler.
In this hearing, a draft bill for the regulation of stablecoin was put forward.
Some Congress members felt that the bill was revolutionary while others like Stephen Lynch and Maxine Waters requested an amendment of the bill. Then came Barr who equally spoke about several other aspects of stablecoins, Central Bank Digital Currencies (CBDCs), as well as the need for Federal oversight.
It is worth noting that beyond the United States, other regions including the UK are also looking into the regulation of their respective stablecoin ecosystem.
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