USDP Stablecoin

According to a Fed official, the US Federal Reserve will establish a &#34;specialized team of specialists&#34; to monitor changes in the cryptocurrency sector due to worries the central bank has regarding &#34;unregulated&#34; stablecoins.Vice Chair for Supervision Michael Barr acknowledged that cryptocurrency could have a &#34;transformative effect&#34; on the financial system but added that &#34;the benefits of innovation can only be realized if appropriate guardrails are in place&#34; on March 9 at the Peterson Institute for International Economics in Washington. The new cryptocurrency team will aid the Federal Reserve in &#34;learning from new developments and ensuring we&#39;re up to date on innovation in this area,&#34; according to Barr. Added him:Invention happens quickly, but it takes some time for people to realize they could make or lose money using new financial products. A balance must be struck between regulation that &#34;would hinder innovation&#34; and that which &#34;will allow for serious harm to households and the financial system,&#34; according to Barr, who also stressed that regulation needed to be a &#34;deliberative process.&#34;Stablecoins were one area of cryptocurrency that Barr cited as cause for concern.He claimed that many stablecoins in use are backed by illiquid assets, making it challenging to convert them into cash when needed. He claimed that this mismatch between value and liquidity is the recipe for a traditional bank run. He thinks that any mass use of stablecoins, absent Fed regulation, might endanger individuals, companies, and the overall economy.The CEO of Custodia Bank, which has repeatedly been denied entry into the Federal Reserve System, Caitlin Long, noted the irony in Barr&#39;s remarks given her opinion that a bank run led to the collapse of Silvergate Bank. Long also referred to the current problems that Silicon Valley Bank is experiencing. After a March 8 financial update revealed that the bank had sold $21 billion worth of its holdings at a $1.8 billion loss, investors began to worry that the bank was being forced to sell to raise capital, which caused the share price to crash.

US Fed to Create New Crypto Team amid Concerns About Unregulated Stablecoins

ItsBitcoinWorld

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