The Federal Reserve Vice Chair for Supervision Michael Barr announced the Fed is setting up a “specialized team of experts” to help it supervise the crypto sector.
Barr, who serves as the Fed’s top regulatory official, said the crypto specialists are needed to help the Fed “learn from new developments and make sure we’re up to date on innovation in this sector.
“Despite recent events, we have not lost sight of the potential transformative effect that these technologies could have on our financial system,” Barr said at an event for the Peterson Institute for International Economics in Washington.
“While crypto assets are hyped as decentralized, there has been an emergence of new, quite centralized intermediaries that are either not subject to or not compliant with appropriate regulation and supervision, which has perpetuated harm to consumers,” said Barr, who once worked as an adviser for crypto exchange and creator Ripple. “Our overall stance is that, at this stage of the development, banks should take a careful and cautious approach to engaging in crypto asset-related activities and the crypto sector.”
Barr also addressed whether the Fed should have been picking up on crypto problems with regional banks like Silvergate before it became a problem.
“We tend to have a very light-touch approach to smaller institutions, so there’s more of an impetus on them to actually be paying attention to these new and novel risks, and we need to make sure that they understand that,” Barr said.