Breaking: US Fed’s Michael Barr Says Banks Should Notify Crypto Activity
Crypto News Today: Amid much debate over the United States’ unclear approach to crypto market, Michael Barr, the US Federal Reserve’s vice chair for supervision, revealed some interesting plans around the space. He had delivered a speech at the Peterson Institute for International Economics, Washington, D.C. on supporting crypto innovation while supervising and regulating crypto market related engagement by the country’s banks. Most interestingly, Barr acknowledged that the central bank is aware of the “potential transformative effect” the cryptocurrencies can bring to the world of finance.
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This comes just days after Fed Chair Jerome Powell said the central bank was closely watching the crypto space as a result of the ongoing turmoil during his speech at the semiannual testimony on monetary policy before a US Senate comittee.
Fed Studying Crypto Innovation
The Fed official said banks are expected to notify the central bank before engaging with crypto businesses. He also revealed the Fed’s view on banks’ attempt to directly own cryptocurrencies as ‘unsafe’. But on the positive side, the Fed Vice Chair said the central bank was creating a team of experts to study the innovative side of cryptocurrencies. Stating that around 20% of the American population owned cryptocurrencies, he raised concerns about the losses faced by many of these individual investors, many who might have lost their savings.
“The technology underlying crypto assets—including that which enables programmability—could bring new functionality or efficiencies to payments systems.”
Barr also raised the important aspect of regulation and the need for investor protection. Customers don’t have the information they need to assess and mitigate their risks, although crypto assets are portrayed as decentralized in nature, he added. Barr brought up the example of FTX collapse, in that it operated in a country with “loose or less developed legal and regulatory frameworks for financial activities.”
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