America, use bitcoin instead of old school fees? Not likely • Register

Federal Reserve Deputy Chairman for Supervision Michael Barr says cryptoassets are “unlikely to grow into cash substitutes” because they have proven to be so volatile and pose “new” risks.

Barr was speaking at the annual fintech ecosystem talk shop in Washington, DC Fintech Week, where he said the idea that you could use them to pay for transactions was implausible. However, he had some faint praise for stablecoins, saying they have a “greater capacity to function as privately issued money.”

Stablecoins can be pegged to a currency or commodity, such as gold, although most currency pegs are pegged to the dollar, such as Tether, the world’s largest stablecoin, with a market cap of more than $68 billion at the time of writing.

Barr added that he believed stablecoins “posed specific and well-understood risks, similar to other types of monetary assets,” although he warned: “History has shown that monetary assets are subject to runs that can threaten financial stability.”

Pretty.

The Fed is particularly interested in stablecoins that are pegged to the US currency, Barr said, although he did not name any specifically.

The news comes a day after cryptocurrency exchange Bittrex paid a whopping $53 million to settle claims by the US Treasury Department’s Office of Foreign Assets Control and its Financial Crimes Enforcement Network that the platform violated US sanctions, federal money laundering laws and other banking regulations.

The exchange was alleged to have done business with netizens in Cuba, Sudan, Syria, Iran and Crimea, which would have violated US sanctions.

Trust in central banks

Barr echoed comments made by Reserve Chairman Jerome Powell earlier this month, who said a central bank will always be the main source of confidence behind money — although we note Powell at the time spoke to a roundtable of other central bankers who are concerned . on decentralized finance in a conference organized by France’s central bank, Banque de France.

Barr noted that stablecoins borrow the trust given to central banks, so regulators were particularly concerned with getting a strong federal framework in place for their use.

He added:

Google Cloud this week joined the ranks of crytocoin acceptors, although the payment method will only be available to a select few at first.

Barr, whose job is to oversee the way the Fed oversees and regulates banks and other financial and fintech types, did not mention the ecological requirements of all cryptoassets — whether stablecoins or more volatile cryptocurrencies like bitcoin — that use the energy-intensive blockchain as a consensus mechanism.

Netscape developer Jamie Zawinski told The register in January that there was “literally nothing in the modern technological ecosystem more short-term,” and called crypto an “ecological disaster” whose main effect was the burning of the planet.

But just a month after a central bank had to work to protect a country from actual market collapse after the UK launched a mini-budget that sent its national debt into freefall, we think it’s fair to say that crypto fans and fintechers alike should sit up. up and pay attention. ®