Fed Governor Urges Stricter Controls on Stablecoins
- Federal Reserve Governor Michael Barr emphasized the need for anti-money-laundering measures for stablecoins under the GENIUS Act.
- Barr highlighted stablecoins’ accessibility on secondary markets as a risk, noting their potential use in money laundering and terrorist financing.
- A U.S. Treasury report suggested Congress consider a law to allow institutions to freeze questionable digital assets voluntarily.
- 66% of stablecoins are held by individuals in emerging markets, where access to dollars is often limited or expensive.
- The Senate recently passed a bill preventing the issuance of a CBDC in the U.S. until at least 2031.
Federal Reserve Governor Michael Barr’s call for tighter controls on stablecoins aims to address their potential misuse in illicit activities due to their easy accessibility, especially in secondary markets without stringent customer identification requirements.
With significant holdings of stablecoins in emerging markets, regulators face challenges balancing accessibility with security concerns, as highlighted by the recent U.S. Treasury report and legislative actions regarding CBDCs and digital asset regulations.
