US Federal Reserve (FED) official Michael Barr made several statements at DC Fintech Week, including cryptocurrencies. Addressing a policy-oriented crowd, he spoke of the regulations. He said regulators must stay ahead of emerging technologies in order to write rules that govern the industry. Here are the details…
FED is working on cryptocurrencies
Earlier this summer, Barr assumed the role of vice president of supervision at the Federal Reserve. Speaking at DC Fintech Week, Barr said the Fed is working with the Office of the Currency Control (OCC) and the Federal Deposit Insurance Corporation (FDIC) to address risks in the crypto industry. The official said risk management is a key issue for regulators, even as they note the possible benefits of different types of innovation. Barr used the following statements:
There are options available to deal with emerging technologies. The benefits are solid. One of them is simply risk identification. So we can let the world know that we see some risks and they need to be looked at carefully. This has a real impact on behavior.
Barr: The cryptocurrency space is full of risks
The Fed official had a talk with event organizer Chris Brummer about fintech innovation. During his session, he touched on the regulation of stablecoins, a new real-time payment system called FedNow that tokenizes bank liabilities and central bank digital currencies (CBDC). He agreed with OCC Acting Michael Hsu’s warnings that some advances in fintech innovation could create potential harm. Barr used the following statements:
Cryptoassets have grown rapidly over the past few years, both in terms of market cap and reach. But recent cracks in these markets have shown that some crypto assets are fraught with fraud, money laundering, theft, manipulation and even risks. Crypto-asset-related activities require oversight to ensure that crypto service providers are subject to similar regulations as other financial service providers.
Still, he said regulators cannot be overly prescriptive, aside from clarity. Barr says it is necessary to use all these tools, especially in a rapidly developing field. Otherwise, just writing the rules can make everything late. He also states that the industry is constantly evolving. On the other hand, he noted that if regulators do not write rules, they fail to provide clarity to organizations that can guide their behavior.
Those in the crypto space also want regulation
Meanwhile, crypto industry leaders argue that it is crucial for the US to introduce crypto regulations. According to many, the regulations will increase adoption in cryptos. It will help prevent regulators from excessively regulating crypto companies and cryptocurrencies. Cardano founder Charles Hoskinson, for example, wants the US Congress to pass crypto laws quickly. He believes it should resolve issues between regulators, as we’ve also reported as Kriptokoin.com.
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