BlockBeats message, on April 1, Federal Reserve Governor Michael Barr said that stablecoin development must be built on strict regulation, and warned that if effective constraints are lacking, history may repeat itself with the “long-standing history of problems caused by private money.” In his remarks, Barr pointed out that although the “GENIUS Stablecoin Bill” has provided the industry with an initial regulatory framework, the key lies in follow-through, including ongoing monitoring of reserve assets and mechanisms to prevent illegal use.
He emphasized that only when stablecoins can maintain redemption at par across a wide range of market conditions can they truly be considered “stable.” Under periods of market stress or when the issuer’s own risk increases, the liquidity and safety of reserve assets are especially critical.
In addition, Barr noted that stablecoin issuers have incentives to make profits by boosting yields, which may lead them to take on higher risk in reserve asset management, thereby posing a potential threat to financial stability. (The Block)
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