Federal Reserve Vice Chairman for Oversight Michael Burr has called on federally regulated banks to be cautious when servicing cryptocurrency companies.
speak at bar DC Fintech Week On October 12, the Fed said it was working hard to find the right balance between promoting innovation in the cryptocurrency market and managing associated risks.
In reference to the recent crypto market contagion, Fed officials urged federally regulated banks to take appropriate steps to manage crypto-related risks before choosing to trade with crypto companies. I urged him to teach.
Barr noted that while banks are not directly exposed to cryptocurrency market losses, liquidity risks associated with deposit volatility could affect financial stability.
“If bank deposits are concentrated in deposits from the crypto-asset industry, banks may experience deposit volatility that correlates and is closely related to broader developments in the crypto-asset market.”
Barr clarified that the statement was not intended to discourage banks from offering products and services to cryptocurrency companies, but rather to remind banks to properly manage their risks. did.
Similarly, OCC Acting Director Michael Hsu previously advised US banks to be cautious in their cryptocurrency-related activities to prevent contagion that could spill over into the mainstream economy.
Dangerous stablecoins for the US
Barr went on to argue that the rapid adoption of stablecoins could pose a risk to the financial stability of the US economy.
He explained that dollar-pegged stablecoins borrow trust from the Fed’s trust, so it’s important to regulate them early and properly.
“Over time, stablecoins could pose risks to financial stability, and it is important to have regulatory frameworks in place before they do.”
The US Congress is working on a number of bills that would specifically regulate the issuance and use of stablecoins as a medium of exchange.
Barr urged banks looking to integrate blockchain solutions into their systems to take into account the risks involved and ensure that their innovations comply with relevant laws.
