Fed. Vice Chair for Supervision Michael Barr said bank regulators have a 'light touch' approach to smaller institutions, and expect them to understand their own risks. jesseahamilton reports
Explore the policy fallout from the 2022 market crash, the advance of CBDCs and more.The U.S. Federal Reserve is putting together a “specialized team of experts” to enhance its supervision of the crypto sector, said Michael Barr, the central bank’s vice chairman for supervision.
Barr, the Fed official with the most potential influence over how the central bank regulates and supervises crypto,this week that the banking regulator is hoping to preserve crypto innovations as it moves forward to put up guardrails. “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 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.
At the smaller banks the Fed has observed getting deeply involved with cryptocurrency activity, “the extent to which they are exposed to correlated risks is not well understood,” he said, and the crypto winter has been a lesson in crypto sector risks being highly correlated.
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