Federal Reserve Barr calls for stronger stablecoin regulation to prevent systemic risks

Mr. Barr, the Fed governor, said more specific regulatory measures were needed to ensure the safe operation of stablecoins. "For stablecoins to reach their full potential, further safeguards need to be put in place to protect the safety of households, businesses and the financial system as a whole," Mr. Barr said on Thursday. Mr. Barr, a former vice-chairperson of regulation at the Fed, welcomed the passage earlier this year of the Genius Act, which establishes a regulatory framework for stablecoins, including the types of assets needed to support their issuance. But he also noted that regulators still needed to close legal loopholes to strengthen market confidence in stablecoins and protect businesses and consumers from "runs" or other destabilising events. The Genius Act requires stablecoins to be backed by highly liquid assets such as US Treasuries.