The top regulatory official for the U.S. Federal Reserve said cryptocurrency technology still could have 'potential transformative' effects on the financial system, but needs 'guardrails' to realize them.
Representations of cryptocurrencies Bitcoin, Ethereum and DogeCoin are placed on PC motherboard in this illustration taken, June 29, 2021. REUTERS/Dado Ruvic/File PhotoWASHINGTON, March 9 - The top regulatory official for the U.S. Federal Reserve said cryptocurrency technology still could have "potential transformative" effects on the financial system, but needs "guardrails" to realize them.
Fed Vice Chair for Supervision Michael Barr said recent turmoil in crypto markets make clear the sector could still pose a risk to traditional banks, but that the impact has been limited as regulators urge caution. U.S. bank regulators, including the Fed, have taken several steps in recent months to ensure banks are approaching the crypto sector with caution, including requiring banks to flag any crypto activities to regulators before proceeding, and warning firms that crypto deposits can be particularly volatile.
"These liquidity concerns are particularly acute for banks that have a meaningful portion of their balance sheets funded with such deposits," said Barr in prepared remarks, which came one day after crypto-focused bank Silvergate Capital Corp announced plans to
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