Michael Barr, Speech: Regarding Crypto Related Activities
Q&A Segment
The economy/monetary policy was not covered.
“I do think this is a really critical moment for us and for the public and for Congress to take a step back and look at the risks and benefits of crypto asset related activity broadly. We have just gone through an experience that did not cause enormous disruption to our broader economy, but was quite disruptive to the crypto asset sector and in a way that revealed some of the problems that people had been highlighting about the sector for a long time like the lack of transparency, the fact that many entities engaged in this activity actively sought to avoid being supervised or regulated, the problem of fraud, misuse of customer funds, some of the hype associated with stablecoins and with crypto asset activities more broadly sort of revealed.”
Speech Segment:
The economy/monetary policy was not covered.
“I’m here today to discuss what we have learned from the recent turmoil in the crypto sector and what role supervision and regulation should play in helping banks manage their engagement with the sector and the innovative technologies that support it. Despite recent events, we have not lost sight of the potential transformative effect that these technologies could have on our financial system. And we need to be careful lest regulation lock in the power of incumbents or stifle innovation. But the benefits of innovation can only be realized if appropriate guardrails are in place. I am going to talk about how we are working to provide clarity to the banks we supervise about what we have learned and about our supervisory expectations. I will wrap up by sharing some thoughts on stablecoins.”
“That gets me back to the central point of my remarks, which is the need to balance innovation with safeguards. Our goal is to create guardrails, while making room for innovation that can benefit consumers and the financial system more broadly. We are working with the other bank regulatory agencies to consider whether and how certain crypto-asset activity can be conducted in a manner that is consistent with safe and sound banking. We are also working toward providing additional clarity on our views of risks and effective risk management practices across a range of crypto-related activity. We will continue to be transparent with the banking sector and the public about our expectations. We will also work with the other agencies to align our approach to ensure that the same risks receive the same treatment. As we continue our efforts, we will work to support innovation by establishing the guardrails essential for sustainable, safe, and transparent markets.”