Federal Reserve's Barr Throws Down The Gauntlet: Stablecoins Need Federal Regulation

Amid the ongoing debates in U.S. House of Representatives concerning the oversight of stablecoin issuers, Federal Reserve Vice Chairman for Supervision Michael Barr has made his stance clear: federal regulation is necessary.

Barr's comments emerge as a critical voice in a debate that sees a partisan split, with Republican legislators advocating for state-level supervision and Democrats, along with Barr, pushing for control by the Federal Reserve, Coindesk reported.

Barr's remarks coincide with increasing discussions on cryptocurrency regulation, an issue that is sure to be a focal point at Benzinga's Future of Digital Assets conference on Nov. 14. As industry stakeholders convene to discuss the evolving digital landscape, the regulatory framework remains a hot topic.

"We need a strong federal framework," Barr stated during the DC Fintech Week, highlighting the urgency for overseeing these digital assets. "They're creating a form of private money, and private money needs to be well-regulated," he continued, underscoring the need for stringent controls in the rapidly expanding domain of private cryptocurrencies.

The legislative process to establish such a regulatory framework is currently underway, with a bill targeting stablecoin regulation having progressed through the House Financial Services Committee, bolstered by limited bipartisan support.

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However, for it to become law, it must secure a majority vote on the House floor and may be incorporated into a broader, essential spending bill to ensure its passage.

The Senate's agreement, however, remains an obstacle that has yet to be surmounted.

Barr also touched upon the subject of a potential central bank digital currency (CBDC) for the United States, emphasizing that the Federal Reserve is still diligently researching its viability.

He reiterated that a concrete decision has not been made, adding, "We haven't made a decision on whether it would be a good idea."

Furthermore, Barr reiterated the Fed's commitment not to proceed with a digital dollar without explicit authorization from both the White House and Congress, reflecting the central bank's cautious approach to this significant monetary innovation.

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