Federal Reserve's Barr Warns of Stablecoin Risks, Emphasizes Need for Enhanced Regulation and Reserve Oversight

MeNews · 2026-04-05T06:02:25+00:00

Federal Reserve Board member Michael Barr emphasizes that stablecoins should develop under strict regulation, warning that a lack of effective constraints could lead to the recurrence of historical issues. He points out that stablecoins need to maintain their face value across various market conditions, with the liquidity and safety of reserve assets being crucial. At the same time, stablecoin issuers may take on increased risks in pursuit of profits, affecting financial stability. Regulation of stablecoins remains a significant point of disagreement in U.S. cryptocurrency legislation.

MeNews

2026-04-05 06:02:25

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ME News, April 1 (UTC+8). Federal Reserve Governor Michael Barr said that stablecoin development must be built on strict regulation, and warned that without effective constraints, history could repeat itself—“the long-standing history of problems brought by private money.” Barr noted in his remarks that although the “GENIUS Stablecoin Act” has provided the industry with an initial regulatory framework, what matters is implementation afterward, including ongoing monitoring of reserve assets and mechanisms to prevent illegal use. He emphasized that stablecoins can truly be considered “stable” only if they maintain redemption at face value across a range of market conditions. When market pressure increases or the issuer’s own risk escalates, the liquidity and safety of reserve assets are especially critical. In addition, Barr said that stablecoin issuers have incentives to profit by boosting yield, which could lead them to take higher risks in managing reserve assets—posing a potential threat to financial stability. At present, stablecoin regulation remains one of the major points of disagreement in U.S. crypto legislation, and also affects the progress of related bills to a certain extent. (Source: ODAILY)

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