Federal Reserve's Barr Warns of Stablecoin Risks, Emphasizes Need for Enhanced Regulation and Reserve Oversight

Golden Finance reports that on April 1, U.S. Federal Reserve Board Governor Michael Barr said that the development of stablecoins needs to be built on strict regulation, and warned that without effective constraints, the long history of problems caused by “private money” could repeat itself.
Barr said in his remarks that although the “GENIUS Stablecoin Bill” has provided the industry with an initial regulatory framework, the key is follow-through—including ongoing monitoring of reserve assets and mechanisms to prevent illicit use. He emphasized that stablecoins can truly be considered “stable” only if they can maintain a redemption at par in a wide range of market conditions. When market pressure increases or the issuer’s own risk rises, the liquidity and safety of reserve assets become especially critical.
In addition, Barr pointed out that stablecoin issuers have incentives to seek profits by boosting yields, which could lead them to take on higher risks in the management of reserve assets, thereby posing a potential threat to financial stability. At present, stablecoin regulatory issues remain one of the major points of disagreement in U.S. crypto legislation, and they also, to some extent, affect the progress of related bills.