US Federal Reserve aims to develop crypto team over unregulated stablecoin issues

United States Federal Reserve is expected to build a “specialised team of experts” to adhere to cryptocurrency-based developments, due to concerns over “unregulated stablecoins,” as stated by Cointelegraph.

According to Cointelegraph, Michael Barr, vice-chair for supervision, Federal Reserve, stated that crypto can cause a “transformative effect” in financial markets. “Innovation always comes quickly, but it takes time for consumers to become aware that they could both gain and lose money on new financial products,” Barr added.

Based on information by Cointelegraph, Barr mentioned that regulation is required to be a “deliberative process” for providing balance between over-regulation and under-regulation. It’s believed that Barr emphasised on stablecoins as a concern, with recommendation that supporting assets for stablecoins are illiquid in nature. “This mismatch in value and liquidity is the recipe for a classic bank run,” Barr said. 

Moreover, Cointelegraph noted that Caitlin Long, CEO, Custodia Bank, pointed towards problems around Silicon Valley Bank. Reportedly, the platform’s shares fell post a March 8, 2023, financial update, which showed $21 billion worth holdings sold at a $1.8 billion loss.

(With insights from Cointelegraph)

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