Federal Reserve's Barr Warns of Stablecoin Risks, Emphasizes Strengthening Regulation and Reserve Audits

Golden Finance reported that on April 1, Federal Reserve Governor Michael Barr said that stablecoin development needs to be built on strict regulation, and warned that if effective constraints are lacking, the “long history of private currencies causing problems” could be repeated.
In his remarks, Barr noted that although the GENIUS Stablecoin Act has provided the industry with an initial regulatory framework, the key lies in subsequent enforcement, including ongoing monitoring of reserve assets and mechanisms to prevent illegal uses. He emphasized that stablecoins can truly be considered “stable” only if they can redeem at par value across a wide range of market conditions. When market pressure increases or the issuer’s own risks intensify, the liquidity and safety of reserve assets are especially critical.
In addition, Barr pointed out that stablecoin issuers have incentives to profit by increasing yields, which could lead them to take higher risks in managing reserve assets, thereby posing a potential threat to financial stability. At present, stablecoin regulatory issues remain one of the major points of divergence in U.S. crypto legislation, and also, to a certain extent, affect the progress of related bills.