The U.S. Federal Reserve needs to regulate and enforce the law against stablecoin issuers, said Federal Reserve Vice Chairman for Supervision Michael Barr, making the federal-oversight argument that has been the major sticking point as the U.S. House of Representatives debates legislation.
Republican lawmakers have leaned into a state-oversight route for companies issuing stablecoins – the steady tokens whose value is pegged to a less volatile asset such as the dollar – and Democrats have favored a dominant role for the Fed. Barr is decidedly in the latter camp.
"We need a strong federal framework," he said Tuesday at the DC Fintech Week event in Washington. "They're creating a form of private money, and private money needs to be well-regulated."
Lawmakers have moved a stablecoin bill through the House Financial Services Committee, winning some support from a handful of Democrats on that panel. The regulatory effort would still need to pass a floor vote in the House, though possibly attached to another must-pass spending bill. Then it needs Senate approval, which has so far been harder to come by.
Barr also addressed the idea of a central bank digital currency (CBDC) in the U.S., saying the Fed is still entirely in the research phase.
"We haven't made a decision on whether it would be a good idea," he said. And he repeated the recent promises from the central bank that it won't move on a digital dollar unless the White House and Congress "clearly authorize" establishing such a thing.
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