Fed’s Barr Flags Stablecoin Risks As Agencies Ready Rules

Federal Reserve Governor Michael Barr said stablecoins present some areas of concern tied to potential money laundering and financial stability risks, in a warning for banking agencies as officials craft regulations.

“The quality and liquidity of stablecoin reserve assets are critical to their long-run viability,” Barr said in prepared remarks for the Federalist Society. “At the same time, stablecoin issuers have an incentive to maximize the return on their reserve assets by extending the risk spectrum as far out as possible.”

Barr also noted on Tuesday the potential benefits of digital assets, such as helping firms with their Treasury functions ...