Fed's Barr expresses concerns about Bitcoin-backed stablecoins.

Golden Finance reported that Federal Reserve Board of Governors member Michael Barr expressed concerns that, under the newly passed GENIUS Act, stablecoins could be backed by Bitcoin as reserve assets, which could threaten the stability of these digital payment tools. Barr acknowledged the potential advantages of stablecoins in international remittances, cross-border trade, and corporate financial management, but emphasized that significant regulatory gaps exist in the current framework. Although the GENIUS Act does not directly support Bitcoin as a reserve, it allows for holding “any medium of exchange authorized or adopted by a foreign government” as reserve assets. Barr pointed out that El Salvador has adopted Bitcoin as legal tender and still allows voluntary transactions, thus issuers may argue that Bitcoin buybacks could qualify as reserve assets for stablecoins.